Mortgage rates, which have risen significantly just since the start of 2022, may be set to do an about-face in 2023.
A Fannie Mae forecast sees 30-year rates averaging 4.5% for all of next year, more than a full percentage point lower than they are now. They’ll fall to 4.7% in the first quarter of 2023 and to an average 4.4% by the end of the year.
Freddie Mac reports the average rate on a 30-year fix last week was about 5.6%, two percentage points higher than where 30-year rates started the year. Thirty-year rates fell to a historic low in December 2020, averaging 2.68%. The annual average for 2021 was 2.96%.
The rapid change in rates this year has added hundreds of dollars to the monthly payment on a typical mortgage, which not only has lowered home affordability but has shut out some buyers from qualifying for a mortgage they would have been approved for a year ago.
The same Fannie Mae forecast predicts a sharp slowdown in home sales next year, falling from an annual gain of 19.4% in the second quarter nationally, to an average annual gain nationwide of 4.4% by the final quarter of 2023.
A separate report Monday from the Federal Housing Finance Agency puts the D.C. metro region at the bottom of the list among the 100 largest metropolitan areas for annual home price gains in the second quarter, though it was still a healthy 9.1%. The annual gain in Baltimore last quarter was 11.8%, ranking the Baltimore area No. 92.
The national average for annual gain in the second quarter was 17.7%.
Several metro areas in Florida posted year-over-year price gains of more than 25%.
