Mid Year Review: What's Happened and What Do We Expect?

It’s a bit surreal to look at the calendar and realize we’re more than halfway through 2023. Like many of you we are looking back to assess the first half of the year, as well as forward to make plans for what’s remaining.

Looking Back

After an economically turbulent 2022, we entered the new year with hope for a stabilizing economy with lower inflation while maintaining the economic growth which would ensure we’d avoid the broadly forecasted recession. Our hopes were realized, as inflation dropped to 4% from its peaks of 9.1% last year in June and 6.4% in January. Of course, the Fed raising its Effective Funds Rate 3.85% in the past year helped slow inflation significantly, however we should recognize that mortgage rates only increased 1.0-1.5% during this time (showing mortgage and fed rates are not directly tied to each other).

Since the beginning of the year, we’ve seen stable mortgage rates dropping from their peaks of 7.08% to as low as 6.09% in February and then rising back to a range of 6.2% to 6.7% for the past 4 months.

Additionally, we’ve seen predictions of major recessions evaporate as our regional and national economies continue to remain strong with modest growth in GDP and very minor increases in unemployment.

Looking Forward

Ironically, the strong economy is currently the primary reason mortgage rates are staying stable in the 6.5% to 6.9% range, which is a mix of good & bad news. Of course, we’d love to see lower mortgage rates unlock more options and affordability, however we’re also happy to see our economy continue in its strength and modest growth.

The majority of economic reports we’re seeing are forecasting continuing decreases in inflation which should help ease the Fed’s concerns. Meanwhile they are also forecasting a very low chance of recession and likely continuing modest economic growth which means its unlikely Fed rates and mortgage rates will decline in the near future.

As mortgage rates continue to stay stable, we’re seeing more and more sellers and buyers move into the market as they’ve recognized rates won’t be dropping to 4% to 5% anytime in the near future. This steady and increasing demand will only get stronger when rates do decline to the lower 6% range later this year, which will drive further competition in our market where homes are selling for 101%+ of list price on average today.

For those who can afford to make a move, now is a good time to consider moving forward as we are experiencing the most balanced market we are likely to see in the near future when rates are anticipated to decline and bring more demand.