What’s Ahead for the U.S. Housing Market?

By Susan Wachter
Knowledge at Wharton
January 10, 2023
Category: Finance & Economics
Region: United States

Susan Wachter

The U.S. housing market last year bore the brunt of higher mortgage rates that rode spiraling inflation in the broader economy, but that will change this year, according to Susan Wachter, Wharton professor of real estate and finance. “The Fed is using the housing market as a fulcrum to slow overall activity and get the inflation rate down,” she said. “When they succeed in doing that, housing and rents are likely to come down most and fastest, and that may get us out of the inflation bubble sooner than we think in 2023.” Until that happens, “the housing market for sure is doomed; it’s a sinking ship,” said Wachter. Housing supply is also running low because new housing construction is declining in response to tepid demand. …Demand is running low… because people are wary of an imminent economic recession. …The outlook for 2023 and beyond, however, is not hopeless.

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