3 Housing Market Predictions for February

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Here’s what to expect in the coming month. 

If you’ve been trying to buy a home and haven’t had success so far, you’re in good company. The real estate market was brutal in 2022 between higher home prices and soaring mortgage rates.

But will things change in 2023? It’s possible. In fact, whether you’re looking to buy a home or sell one, it’s important to keep tabs on the housing market. And here are a few things to anticipate for the month of February.

1. Mortgage rates will remain high, but there may be relief

Mortgage rates dipped nicely in January, hovering in the lower 6% range. Seeing as how they were above 7% in late 2022, that makes a big difference. And we could see rates dip a bit more in February as mortgage lenders make adjustments to account for waning buyer demand.

Does this mean we’ll be looking at sub-6% mortgage rates in February? It’s hard to say. But we could easily see rates fall to just around 6% if recent trends uphold.

2. Housing inventory will remain low

As of late December, there was a mere 2.9-month supply of available homes for sale, reports the National Association of Realtors (NAR). That represents a nice uptick from December of 2021, when there was only a 1.7-month supply.

Still, it generally takes a good four- to six-month supply of homes for sale to meet buyer demand in full. This means that you might struggle to find an affordable home in February, and one that checks off the right boxes for you.

It’s also worth noting that the winter months tend to be a slower time for listings in general. So we really shouldn’t expect a large uptick in inventory during February. That could change, however, once spring arrives. Spring is typically when we see a substantial increase in home listings, although the spring boom hasn’t happened in several years.

3. Homes will still be expensive

The median existing home sale price in December was $366,900, as per the NAR. That represents a 2.3% increase from a year prior, when the median existing home sale price sat at $358,800.

Now it’s worth noting that existing home sales have been slowing down. In fact, the NAR reports that existing home sales came to 5.03 million units in 2022, which represents a 17.8% decrease from 2021.

But a decrease in existing home sales doesn’t just mean that fewer people wanted to buy. It could also be that there were fewer homes available to buy.

All told, home prices are likely to remain elevated in February. That said, sellers may not get away with commanding the same prices they might’ve in February of 2022.

Even though mortgage rates had already started to climb by February of 2022, they weren’t nearly as high back then as they are today, even with a recent dip. So all told, buyer demand is likely to be lower this February, which is something sellers should account for.

February has the potential to be a very interesting month for home buyers and sellers alike. No matter which category you fall into, keep paying attention to real estate market trends, as they might inform your housing decisions in a very big way.

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