Washington DC Real Estate

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The Isaacs Team | DC Real Estate

Spring Market | DC Real Estate

The new normal: Cash and highly qualified buyers unfazed by mortgage interest rates and increasing recession risk will take advantage of market uncertainty. With rates shifting between 6.25% to 7.1%, we predict the volume and pace of the DC market will slow from the same time the previous year, but prices will continue to climb.

Rates are still historically low and financing buyers are beginning to adjust, utilize ARM mortgages, and planning for moderate rate drops in late 2023 and 2024. But they're unlikely to want to put money into improvements after closing, so turnkey homes will sell well, and buyers will exercise more caution with home inspections and careful evaluation of price. Also a consideration, school boundary changes are being decided this year. See our blog post on that topic.


What To Expect In 2023

First-time buyers will face a daunting market due to credit tightening, interest rate and price increases that outpaced 2022 savings for down payment and closing costs.

We expect DC real estate market activity to heat up with the weather in April this year, while the second half of 2023 could slow considerably due to looming recession combined with the start of the 2024 election cycle. Rates are likely to remain high through 2023, with some relief expected in 2024.

The Impact Shortlist:

  • Rates, National Financial Markets
  • Recession Predictions
  • School Boundaries Redraw
  • Political Activity

DC Real Estate Market Summary

With Susan Isaacs

In the District of Columbia:

  • Median Sold Price for all home types in April 2023 was $676,500., up 5.6% from March and down 3.2% from April 2022.
  • Average Days On Market was 29 days, up slightly from the 5 year average of 26 days.
  • Average Sold to List Price Ratio was 98.3%, up 1.0% from March 2023.
  • There were 1,762 Active listings (well over the 5 year average of 1.573), 982 New listings, 768 new pending sales, and 610 closed transactions the reporting vendors were aware of (see ‘Off-Market Inventory & Sales below).

Visit the following links for details on individual home types, detailed DC market data and DC real estate values:

Off-Market Inventory & Sales

Keep in mind that a significant percentage of homes bought and sold in the District of Columbia are transacted off-market. This ‘shadow’ inventory is not available to third party sites and is unlikely to be included, or reported with accuracy, by any market data tool. For this reason, Washington DC market data should be viewed as informational, rather than absolute. Assessments of inventory may be quite skewed based on the now commonplace use of ‘Private Exclusive’ listings held by individual brokerages.

How The Economy Impacts Housing

Main factors that affect the housing market are economic growth, housing demand, unemployment. interest rates. consumer confidence, mortgage availability and supply.

DC housing market data

Housing Starts

Tracking housing starts by new residential construction permits is a key in determining the health of a local real estate market. When the economy is strong, more new homes are built and sold. In weak economies, fewer permit applications are made and fewer new homes are sold. Housing starts are essential indicators of economic health, and affect related markets such as mortgages, land sales, raw materials and employment.

Home Sales And the Economy

There is a direct correlation between home sales and economic health. As economies slow, money supply becomes harder to borrow, and as a result, fewer home buyers enter the housing market. This leads to diminished home inventory and homes on the market take longer to sell. A greater supply of homes in a market with lower demand generally forces prices downward.

Money Supply Impacts Housing Sales

Money supply is critical to housing market health. When borrowing is too difficult, housing starts and home sales slow significantly. When borrowing is too easy, too many buyers enter the housing market and drive up prices until a market correction or crash occurs.

Foreclosures Reflect a Market Downturn

Foreclosures are an indicator and a result of a housing market decline or crash. If interest rates rise dramatically, borrowers with adjustable rate mortgages may not be able to refinance or stay current on the debt. This results in increased foreclosure activity. Mortgage type isn’t the only reason for heightened foreclosure volume.The leading causes of foreclosure are rising unemployment, debt (medical debt in particular), divorce, death of a spouse or partner who contributed income, and  unexpected large expenses.

Economic Slowdowns

When the economy slows, it will affect the housing market, which in turn negatively impacts the economy as housing-related activities decline. This economic cycle breaks once economic improvement begins and housing prices reflect consumers’ confidence in their ability to take on mortgage debt.

DC Is An Unusual Market

The District is a unique and sought-after housing market– among the strongest in the country. Bouyed by the constant ebb and flow of government officials and contractors, Amazon’s HQ2, the tech sector, scarcity of land and the District’s small size (68.3 SqM), and its connectivity to adjoining states, Washington DC has weathered many declining markets well, and recovered quickly.


News | Markets Under Pressure

Main factors that affect the housing market are economic growth, housing demand, unemployment. interest rates. consumer confidence, mortgage availability and supply.

market under pressure

Powell's March 7th Remarks

Market Reaction

“There is little sign of disinflation thus far in the category of core services excluding housing, which accounts for more than half of core consumer expenditures. To restore price stability, we will need to see lower inflation in this sector, and there will very likely be some softening in labor market conditions.” 

“The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated”

“If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”

March 7th Remarks

Market response to Powell’s statements was swift. Major indexes fell more than 1% and the 2-year Treasury note jumped to its highest mark since 2007. Nasdaq lost 1.3%.

There is a 61.6% probability the Fed will raise its benchmark rate by 50 basis points on March 22, according to the CME FedWatch tool tracking fed funds futures pricing.

Investors increasingly anticipate the Federal Open Market Committee will beef up its rate increase after hiking by 25 basis points at its last meeting and 50 basis points before that. The slowdown followed four straight increases of 75 basis points.

March 8th Testimony

March 10th Jobs Report

The March 10th jobs report shows higher than expected payroll increases for an 11th straight month, and more people joined the workforce.  Employers added 504,000 jobs in January, and 300,000+ in February as the US labor market continued to show strength–but there were some signs of atrophy. While job opportunities are still historically high, they waned in January, and the level of layoffs rose to the highest since the end 2020.

Jobs Report

February Inflation Data

Inflation eased on an annual basis but rose in February over the prior month. The Federal Reserve must decide whether to continue raising interest rates while the banking system is in turmoil.

The annual inflation rate in the US reached 6% in February of 2023, slowing for an eighth straight month and marking the lowest level since September of 2021. The reading came in line with market forecasts, and compares to 6.4% in January. The energy index increased 5.2%, and the food index increased 9.5%. Core inflation also edged lower to 5.5% from 5.6%. Compared to the previous month, the CPI rose 0.4%, following a prior 0.5% gain and also matching forecasts. The index for shelter was the largest contributor, accounting for over 70% of the increase. The core rate however, edged higher to 0.5% from 0.4% in January, compared to forecasts of a 0.4%.


March 14 CPI Report

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4% in February on a seasonally adjusted basis, after increasing 0.5 percent in January, the U.S. Bureau of Labor Statistics reported today.

Over the last 12 months, the all items index increased 6.0% before seasonal adjustment.

Shelter: The largest contributor to the monthly all items increase, accounting for over 70% of the increase

Food: The food index increased 0.4% over the month with the food at home index rising 0.3%.

Energy: This index decreased 0.6% over the month as the natural gas and fuel oil indexes both declined.

The index for all items less food and energy rose 0.5% in February, after rising 0.4% in January. Categories which increased in February include shelter, recreation, household furnishings and operations, and airline fares. The index for used cars and trucks and the index for medical care were among those that decreased over the month. The all items index increased 6.0 percent for the 12 months ending February; this was the smallest 12-month increase since the period ending September 2021. The all items less food and energy index rose 5.5% over the last 12 months, its smallest 12-month increase since December 2021. The energy index increased 5.2% for the 12 months ending February, and the food index increased 9.5% over the last year.


Banking Turmoil Game Changer

Release of the Inflation Report and CPI was overshadowed by banking turmoil news and analysts changed their predictions as a result. Phil Rosen of the Insider reports:

Nadia Evangelou, Sr. Economist & Director of Forecasting at NAR altered her 2023 outlook. On March 11th Evangelou said she anticipated home prices and sales to dip this year, with a rebound in 2024. On March 16th, her predictions revised:

“We had expected mortgage rates to come down to the lower range of 6% sometime in the second half of 2023, but now we may see that level in the coming weeks. The housing sector reacts immediately to changes in mortgage rates.”

Evangelou’s long-term outlook on a housing rebound hasn’t changed, mortgage rates look set to fall faster than previously expected, which could allow more Americans to enter the housing market.

Evangelou’s long-term outlook on a housing rebound hasn’t changed, mortgage rates look set to fall faster than previously expected, which could allow more Americans to enter the housing market.

Rates have fallen in the wake of the SVB collapseand the number of people applying for mortgages jumped 6.5% compared to a week ago, according to Mortgage Bankers Association data.

Evangelou remarked: “If mortgage rates dip to around 6%, more people would be comfortable purchasing a home compared to when it’s around 6.7% or higher.”

At the Fed’s meeting next week, Evangelou expects policymakers to moderate their aggressive policy.

“The previous week I could see the Fed hiking 50 basis points, but now I think 25 basis points is the highest hike that they may take,” she said.

Many traders agree with her. CME’s FedWatch Tool tells us that markets think the odds of whether the Fed makes a quarter-point move or no move at all amount to basically a coin toss.

March 21 Housing Report

The rebound in U.S. existing home sales was stronger than expected, as lower mortgage rates and the first year-on-year decrease in prices in 11 years drew buyers into the market.

The jump in sales of previously owned homes, reported by the National Association of Realtors (NAR), was the largest in more than 2-1/2 years and ended 12 straight monthly declines in sales, the longest such stretch since 1999.

  • Existing home sales jump 14.5% in February
  • Median house price falls 0.2% to $363,000 from year ago
  • Supply increases 15.3% year-on-year to 980,000 units

It was the largest monthly percentage increase since July 2020. NAR reported month-over-month sales rose in all four major U.S. regions.

Total existing-home sales increased 14.5% from January to a seasonally adjusted annual rate of 4.58 million in February, though year-over-year sales were still down 22.6%.

NAR Chief Economist Lawrence Yun said:

“Conscious of changing mortgage rates, home buyers are taking advantage of any rate declines. Moreover, we’re seeing stronger sales gains in areas where home prices are decreasing and the local economies are adding jobs.”


Total housing inventory for February was 980,000 units, unchanged from January and up 15.3% from 2021. There is a  2.6-month supply of homes at the current sales pace, down 10.3% from January but up from 1.7 months in February 2022.

“Inventory levels are still at historic lows,” Yun commented. “Consequently, multiple offers are returning on a good number of properties.”

February Highlights:

  • First-time buyers represented 27% of buyers, down from 31% in January 2023 and 29% in February 2022, showing the impact of higher rates and tightening credit;
  • 28% of sales were all-cash, mostly unchanged from 29% in January and up from 25% in February 2022, showing that cash buyers are taking advantage of weaker market conditions relating to higher interest rates;
  • 57% of respondents reported that properties sold in less than one month. This is up from 54% a month ago and down from 84% in February 2022;
  • Due to the lack of housing inventory, the pace of the market, and the use of technology, 7% of buyers purchased a home based only on a virtual tour, showing, or open house without physically seeing the home. This metric rose from January and dropped from one year ago.


What's Next?

The collapse of SVB Financial–the biggest bank failure since 2008–and additional bank woes involving Credit Suisse and First Republic–increased concerns that higher interest rates are threatening lenders.

At the U.S. Federal Reserve meeting March 21-22, bank failures will be reviewed, along with the retail sales report and reports on producer prices, housing starts and industrial production for February as a decision is weighed on another rate increase.


Rate Decision

The Fed’s decision on an interest rate increase has been announced. There will be a raise of 25 basis points, rather than a pause, and a change to guidance, specifically that some additional adjustments will be likely required, in lieu of continuing adjustments. Interest rate changes to be made meeting to meeting.

Many experts expect the previously anticipated increase of a 50 basis point increase but revised expectations to 25 basis points as a result of banking turmoil.




From CNBC:

  • The consumer price index rose 0.1% in March and 5% from a year ago, below estimates.
  • Excluding food and energy, core CPI accelerated 0.4% and 5.6%, both as expected.
  • Energy costs fell and food prices were flat. Used vehicle prices also declined.
  • A 0.6% increase in shelter costs was the smallest gain since November, but still resulted in prices rising 8.2% on an annual basis.


Slowing Inflation

The month of March saw cooling Inflation as fallout from banking turmoil and the Federal Reserve’s continued interest rate increases impacted the economy.

The Consumer Price Index CPI), measuring the costs for goods and services in the U.S. economy, rose 0.1% for the month against a Dow Jones estimate for 0.2%, and 5% from a year ago versus the estimate of 5.1%.

Excluding food and energy, core CPI increased 0.4% and 5.6% on an annual basis (as expected).

The data shows that inflation, while well above where the Fed wants it, is showing continuing signs of decelerating. Policymakers target inflation around 2% as a healthy and sustainable growth level. The headline increase for CPI was the smallest since June 2021.




MAY 1 2023 CNBC

JPMorgan Chase, already the largest U.S. bank by several measures, emerged as winner of the weekend auction for First Republic. It will get all of the ailing bank’s deposits and a “substantial majority of assets,” the New York-based bank said.


The FDIC estimates the deal will cost the Deposit Insurance Fund roughly $13 billion. The final cost will be determined once the FDIC terminates receivership.


MAT 2 2023

PacWest (PACW) and Western Alliance (WAL) plunged May 2nd with stock drops of more than 20% in morning trading come one day after JPMorgan Chase (JPM) absorbed First Republic (FRC), in a deal designed to restore stability to the banking system after two months of turmoil.

Other regional banks also plummeted, including Zions (ZION), Comerica (CMA) and Key (KEY).

Along with First Republic, PacWest and Western Alliance came under intense investor scrutiny after March failures of Silicon Valley Bank and Signature Bank. Both lost a sizable Q1 deposit volume as customers sought the perceived safety of larger banks or higher yields being offered by money market funds. PacWest lost 17% of its deposits and Western Alliance lost 11%,. First Republic lost 41%.


Market Reaction


The stock market has been nervous about the condition of the financial sector for a while now, and concerns mounted once again on Tuesday. Major market indexes were down between 1% and 2% at midday as investors wondered if the latest bank failure would prove to be the last. Moreover, against the backdrop of the ongoing Federal Reserve meeting to decide what to do with interest rates, market participants seemed particularly on edge.

Among regional banks, significant declines were prevalent. PacWest Bancorp (NASDAQ: PACW) and Western Alliance Bancorporation (NYSE: WAL) were among the worst performers in the industry on Tuesday, and the drops in bank stock prices certainly suggest that the investing community needs more reassurance about how the banking system will handle current pressures.




Analysts expect the Fed to announce a quarter-point interest rate hike on Wednesday to a range of 5% to 5.25%. And the markets are pricing in 95% odds of a rate increase.

Further increases down the road could spell more trouble for regional banks. Rising interest rates sparked the crisis, causing bond prices and hold-to-maturity treasuries to decline. Massive unrealized losses began mounting for bank investment units that had misjudged the impact of rising interest rates.

And Andrew Krei, co-chief investment officer at wealth management firm Crescent Grove Advisors, told IBD the biggest risk for banks continues to be of deposits fleeing to safer firms or high-yielding alternatives.

Profitability will likely be crimped as banks are forced to raise interest rates on deposit accounts to compete with money market funds. An inverted yield curve, when long-term bond yields fall below those of shorter term issues, makes the dynamic even more painful, according to Krei.


Market Reaction

May 2, 2023

A group led by several prominent Democratic lawmakers is calling on the Federal Reserve to halt rate hikes to avoid risking too much damage to the economy.

The 10 senators and representatives, led by Sen. Elizabeth Warren of Massachusetts, Reps. Pramila Jayapal of Washington and Brendan Boyle of Pennsylvania, raised their concerns about the Fed’s monetary policy strategy and its “potential to throw millions of Americans out of work,” in a letter Monday to Fed Chair Jerome Powell.

The letter was sent ahead of the Fed’s anticipated rate hike announcement Wednesday. It would be the 10th increase since last year, as the central bank has tried to tame inflation. Some expect the Fed to pause hikes after Wednesday.

The lawmakers called on the Fed to suspend rate hikes to “respect” its dual mandate and “avoid engineering a recession that destroys jobs and crushes small businesses.”

“While we do not question the Fed’s policy independence, we believe that continuing to raise interest rates would be an abandonment of the Fed’s dual mandate to achieve both maximum employment and price stability and show little regard for the small businesses and working families that will get caught in the wreckage,” the lawmakers wrote.

Seven other senators and members of the House also signed the letter addressed to Powell.



Fed Raises Rates by Quarter-Point and Hints at Pause
From: Nicholas Jasinski | Barrons

The Federal Reserve raised its benchmark interest rate by a quarter of a percentage point May 3rd.

A statement from officials explaining the move and detailing the bank’s views of the economy indicates the Fed believes it can move ahead in its fight against inflation despite concerns about the banking system.

Officials called the U.S. banking system “sound and resilient” in their statement on Wednesday. They noted that it was too early to quantify the extent of the impact banks potentially pulling back on lending would have on the economy and inflation.

The move leaves the bank’s target for the fed-funds rate at 5.0% to 5.25%, a level not seen since the Fed cut rates in the autumn of 2007.

The statement suggests that this may be the last increase of the current series. It no longer includes the phrase “the Committee anticipates that some additional policy firming may be appropriate” in order to get the annual inflation rate down to the bank’s 2% target.

Policy makers will study the incoming data and take into account the lag with which the tightening they have already done acts on the economy. Wednesday’s rate increase was the 10th in a little more than a year.

‘Prepared to Do More’

 Barron’s May 3 2023

Powell left the door open to further interest-rate increases should the economic data warrant it, saying that the bank’s policy-setting committee, the Federal Open Market Committee, is now in data-dependent mode, with decisions being made one meeting at a time.

“A decision on a pause was not made today,” Powell said at his press conference Wednesday.

Should inflation or jobs data come in hotter than expected, the Fed could continue to increase interest rates. “We are prepared to do more if greater monetary policy restraint is warranted,” Powell said.

The committee is no longer biased toward tightening, however. Policy makers removed the phrase “the Committee anticipates that some additional policy firming may be appropriate,” which had been included in statements following earlier rate increases, from their statement published on Wednesday.

Powell Closes the Door to Rate Cuts in 2023

Futures markets are pricing in roughly three-quarters of a percentage point of reductions in the fed-funds rate by the end of 2023 from the current level of 5.00% to 5.25%. But according to Fed Chairman Jerome Powell, it isn’t likely to happen.

“We on the committee have a view that inflation is going to come down—not so quickly, it will take some time,” Powell said. “In that world, if that forecast is broadly right, it would not be appropriate to cut rates.”

It would take a more rapid decline in inflation than the Fed is forecasting to open the door to rate cuts in the foreseeable future. If that is accompanied by sharp job losses and a decline in economic activity, then the Fed might be inclined to step in.

But that isn’t what Fed officials expect to happen at this point.


Press Conference

May 3, 2023



Wall Street reacted to the latest decision and comments from Powell:

Jay Bryson, Chief Economist, Wells Fargo

“In our view, the Committee is signaling a hawkish pause in the tightening cycle. That is, the FOMC could clearly hike rates again, especially in light of the sentence in the statement reiterating that Committee members remain ‘highly attentive to inflation risks.’ However, the bar to hike again on June 14 appears higher than it has been at past meetings since March 2022.”

Michael Gapen, U.S. Economist, Bank of America

“For now, inflation still dominates and data in hand outweighed uncertainty from bank stress in terms of the decision to raise rates in May. We think the Fed has reached its terminal rate in this tightening cycle, though we note that there are two employment reports and CPI inflation reports before the June FOMC meeting (the second CPI report comes on the first day of the June meeting). Should regional bank stress stabilize, labor markets stay tight, and inflation stay elevated, a rate hike in June could become appropriate.”

Ian Shepherdson, Chief Economist, Pantheon Macroeconomics

“We expect the two rounds of payroll, CPI, PPI and activity data between now and the June meeting to confirm that the economy has weakened markedly and that inflation pressure is receding, so we think the Fed will leave rates on hold. Note that it is entirely possible that the debt ceiling situation is at crisis point at the time of the June meeting, with markets in turmoil, adding to the case for the Fed not to act. We think the Fed’s next move will be an easing, in September or November.”


Market Updates Coming

May 9 2023

U.S. inflation data will be released this week and the CPI (consumer price index) for April will be published on Wednesday, with the producer price index reporting on Thursday.



  • Consumer price index increases 0.4% in April
  • CPI rises 4.9% year-on-year
  • Core CPI gains 0.4%; up 5.5% year-on-year

WASHINGTON, May 10 (Reuters) – The annual increase in U.S. consumer prices slowed to below 5% in April for the first time in two years, while a key inflation measure monitored by the Federal Reserve subsided, potentially providing cover for the central bank to pause further interest rate hikes next month.

Nevertheless, inflation remains too strong, with the report from the Labor Department on Wednesday showing monthly consumer prices rising solidly because of sticky rents as well as rebounds in the costs of gasoline and used motor vehicles. The mixed report dashed financial market hopes that the Fed would start cutting rates this year to shore up the economy.


  • Food prices were unchanged for a second straight month. Grocery store prices fell 0.2% after decreasing 0.3% in March, posting back-to-back declines for the first time since July 2019. Fruits and vegetables, meat, fish and eggs were cheaper compared to March. Milk prices dropped 2.0%, the most since February 2015.
  • Natural gas prices tumbled 4.9% and the cost of electricity dropped for the second straight month, blunting some of the 3.0% jump in gasoline prices, which followed a 4.6% plunge in March.
  • In the 12 months through April, the CPI increased 4.9%. That was the smallest year-on-year rise since April 2021 and followed a 5.0% advance in March.



  • Nonfarm payrolls increase by 253,000 in April
  • Unemployment rate falls to 3.4% from 3.5%
  • Average hourly earning rise 0.5%; up 4.4% year-on-year
  • The economy created 149,000 fewer jobs in February and March than previously reported. Job growth has averaged 290,000 jobs per month over the prior six months. Economists polled by Reuters had forecast payrolls would rise by 180,000.

The economy needs to create 70,000-100,000 jobs each month to keep up with growth in the working-age population. The share of private industries adding jobs rose to 57.4% from 57%.

The larger-than-expected increase in payrolls could be hinting at some spring revival in the economy after activity slowed in February and March.

WASHINGTON, May 5 (Reuters) – U.S. job growth accelerated in April while wage gains increased solidly, pointing to persistent labor market strength that could compel the Federal Reserve to keep interest rates higher for longer as it fights to bring inflation under control.

The Labor Department’s closely watched employment report on Friday also showed the unemployment rate falling back to a 53-year low of 3.4%.

Though data for February and March were revised sharply lower, the labor market is slowing only marginally. It suggested there was no impact yet on the economy from tighter credit conditions, which together with the Fed’s punitive rate hikes have raised the risk of a recession.


National | Regional Summaries

National Real Estate Market

Forbes Advisor Highlights

MAY 3 2023

Mortgage rates increased 15 basis points in April, while pending and existing home sales slumped in March. Though the median existing-home sales price edged lower year-over-year for the second consecutive month—a promising sign for home shoppers—substantial, nationwide price declines are likely not in the cards.

Tight inventory issues continue to keep prices high, perpetuating affordability challenges for many, especially first-time homebuyers. For one, the nation’s housing supply remains limited—and probably will remain so for at least the near future—due, in part, to those who purchased homes in recent years at record-low interest rates staying put.

Though home prices are not as eye-popping as in early 2022, how much further home prices dip in 2023 will depend on the housing market region and where mortgage rates go.

Housing Market Forecast for May 2023

As we move through spring homebuying season, buyers and sellers remain at a standoff.

Persistently high mortgage rates and home prices continue to put off many prospective homebuyers as fears of ongoing inflation, bank sector volatility, weakening economic growth and an impending recession hang in the air.

Meanwhile, the Federal Reserve voted to raise its key interest rate by one quarter of a percentage point on May 3, a move in line with most housing experts’ predictions. The Fed also signaled that it may pause rate hikes for the remainder of the year should inflation continue to fall. A Fed rate hike has an indirect impact on long-term home loans, such as 30-year, fixed-rate mortgages.

These circumstances have put a strain on the housing market, which remains a mixed bag.

On the one hand, home shoppers received good news, with the median existing-home sales price declining 0.9% to $375,700 in March compared to a year ago, according to the National Association of Realtors (NAR). This is the second consecutive month of year-over-year home price declines after a 131-month streak of record increases.

On the other hand, total existing-home sales dipped 2.4% from February to March and are down 22% from a year ago, per NAR.

“Home sales are trying to recover and are highly sensitive to changes in mortgage rates,” said Lawrence Yun, chief economist at NAR, in a report. “Yet, at the same time, multiple offers on starter homes are quite common, implying more supply is needed to fully satisfy demand. It’s a unique housing market.”

Some Experts Foresee a Sluggish Housing Market Recovery

Following several weeks of declines in March and early April, mortgage rates edged higher in recent weeks, reaching 6.43% the week ending April 27, according to Freddie Mac.

“If current economic conditions persist, with elevated mortgage rates and home prices amid scarce inventory, the market is likely in for a long, slow climb and a few bumps along the way,” said Danielle Hale, chief economist at Realtor.com, in an emailed statement.

“Both conventional and government home purchase applications increased last week. However, activity was still nearly 28% below last year’s pace,” said Joel Kan, vice president and deputy chief economist at Mortgage Bankers Association.

Even so, some experts predict a slow recovery may soon be underway.

“The 30-year fixed-rate mortgage increased modestly for the second straight week, but with the rate of inflation decelerating rates should gently decline over the course of 2023,” said Sam Khater, chief economist, in a press statement. “The prospect of lower mortgage rates for the remainder of the year should be welcome news to borrowers who are looking to purchase a home.”

Housing Inventory Outlook for May 2023

Low housing inventory has been a challenge since the 2008 housing crash when the construction of new homes plummeted. It still hasn’t fully recovered—and won’t in 2023.

Housing supply holding steady at near historic lows has propped up demand compared to other downturns, consequently sustaining higher home prices.

“Inventory is approximately 46% below the historical average dating back to 1999,” says Jack Macdowell, chief investment officer and co-founder at Palisades Group.

At the current sales pace, unsold inventory is unchanged from March at a 2.6-month supply, according to NAR. Though up from 2.0 months a year ago, supply is low by historical standards, especially in the face of pent-up demand.

With reportedly 85% of homeowners sitting on mortgage rates below 6%, industry experts have a gloomy outlook on when inventory will eventually normalize.

“We think that it is highly unlikely that the inventory problem will be resolved in 2023,” says Macdowell.

Housing Starts Forecast 2023

At the same time, there are positive signals in the homebuilding realm. Single-family construction starts rose for the second consecutive month, increasing 2.7% in March, and applications for building permits increased by 4.1% from the previous month, according to the U.S. Census Bureau and HUD.

The latest builder outlook data reflected optimism as well.

The most recent National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) that tracks builder sentiment ticked up a point, from 44 to 45. This is the fourth month-over-month increase following 12 consecutive months of declines.

Even so, builder confidence is still considered low—50 or above means more builders see good conditions ahead. Nonetheless, these consecutive upticks signal a positive trend in new-home construction as the apparent demand for new homes—which surged 9.6% in March—is likely due to a retreat in mortgage rates and tight existing-home inventory.

Also, the Federal Reserve isn’t helping matters with its ongoing rate hikes. At a semiannual hearing before the Senate Banking Committee, Federal Reserve Chair Jerome Powell addressed questions about the Fed’s aggressive monetary tightening policies in its efforts to rein in inflation.

In an exchange with Senator Raphael Warnock (D-Ga.), Powell acknowledged that raising the central bank interest rate increases borrowing costs for companies that develop new housing and makes financing and expanding production for suppliers more expensive. He also conceded that elevated mortgage rates discourage homeowners with low fixed-rate mortgages from selling their homes.

“Homeowners, homebuyers, lenders, as well as builders, are trying to adapt and predict interest rates, home prices, supply, demand and the potential for a Fed-induced recession,” says Macdowell. “As a result, builders may be reluctant to start new projects that would bring needed housing product to the market.”

Will There Be a Lot of Foreclosures in 2023?

Though still below pre-pandemic levels, foreclosures have been edging up since the expiration of the Covid-19 foreclosure moratorium in September 2021.

In the first quarter of 2023, foreclosures climbed 6% from the previous quarter and were up 22% from the first quarter of 2022, according to ATTOM, a property data provider. March foreclosures were up 10% from a year ago and 20% between January and February.

“This unfortunate trend (in foreclosure activity) can be attributed to a variety of factors, such as rising unemployment rates, foreclosure filings making their way through the pipeline after two years of government intervention and other ongoing economic challenges,” said Rob Barber, chief executive officer at ATTOM.

Even though foreclosures are on the rise, Barber noted that the significant equity many homeowners still have should help prevent increased levels of foreclosure activity.


DCMA Real Estate Market

The DC Metro Area includes Washington DC and parts of Maryland, Virginia, and West Virginia. It’s important to clarify the areas of the region being used by data reports before relying upon their numbers. Real estate is local first, so while we look at data for various regions surrounding the District of Columbia, our primary focus is on the District itself, parts of northern Virginia, and particular Maryland counties. We find this to be the most accurate representation of the market we live and work in.

Here are the four primary measures of the DCMA regional housing market for all home types:

Global News | Recession Watch

The Conference Board

Global Recession Map

Global leading indicators signal a likely further slowing in global GDP. 

Declines in real GDP per capita are often associated with recessions.


The Conference Board

Global Forecast

Global real GDP is forecasted to grow by 2.3 percent in 2023, down from 3.3 percent in 2022. Most of the weakness will be concentrated in Europe, Latin America, and the US. Asian economies are expected to drive most of global growth in 2023, as they benefit from ongoing reopening dynamics and less intense inflationary pressures compared to other regions.

Despite rapid monetary tightening, inflation is proving persistent in many key economies, particularly on the back of strength in job markets amid severe labor shortages. Therefore, monetary policy is likely to remain restrictive throughout most of 2023. This will act as a break on economic activity and will likely lead to increases in unemployment rates in various economies, particularly in Europe and the US.

Global real GDP growth should pick up steam in 2024 to 2.5 percent and be more evenly distributed among regions. Tailwinds to growth in 2024 will largely come from fading shocks related to the pandemic, elevated inflation, and monetary policy tightening. However, growth rates in 2024 and beyond are likely to be below the prepandemic trend, given ongoing supply-side weakness (e.g., ageing demographics worldwide and slow productivity growth). Inflation, while lower than experienced currently, may remain relatively elevated for several reasons, including expected persistence in labor shortages.


The Conference Board

U.S. Economic Forecast

The Conference Board forecasts that economic weakness will intensify and spread more widely throughout the US economy over the coming months, leading to a recession starting in mid-2023. This outlook is associated with persistent inflation and Federal Reserve hawkishness. We forecast that real GDP growth will slow to 0.7 percent in 2023, and then rise to 0.9 percent in 2024.

US GDP growth defied expectations in late 2022 and early 2023 data has shown unexpected strength. The US economy, and especially the US consumer, has resisted the duel headwinds of high inflation and rising interest rates. Because of this, we are increasing our Q1 2023 forecast to 1 percent. However, we continue to forecast that the US economy will slip into recession in 2023 and expect GDP growth to contract for three consecutive quarters starting in Q2 2023. These changes to the quarterly forecast result in an upgrade to our annual forecast for 2023 and a downgrade to our annual forecast for 2024.

The recent collapse of Silicon Valley Bank and several other smaller banks has triggered alarm about financial stability in the United States (see our analysis here). While we do not think this risk is immaterial, we do not expect the contagion to spread more broadly throughout the banking system. The direct macro implications should thus be minimal. However, there may be implications for US monetary policy. At present, we do not expect the Federal Reserve to pause interest rate hikes, but at the same time, we do not expect increases in excess of 25 basis points moving forward. We believe that the Fed will hit its terminal rate window of 5.25 to 5.50 percent in Q2 2023.

Labor market tightness will moderate somewhat over the coming quarters but will remain elevated relative to previous economic downturns. This should prevent overall economic growth from slipping too deeply into contractionary territory and facilitate a rebound in early 2024. Inflation will continue to cool over the course of 2023 as well, but the Fed’s 2 percent inflation target will remain elusive. As such, the Federal Reserve will not cut interest rates until next year, in our view.

Looking to 2024, we expect the volatility that has dominated the US economy over the pandemic period to diminish. We forecast that overall growth will return to more stable pre-pandemic rates, inflation will drift closer to 2 percent, and the Fed will bring rates back below 4 percent. However, due to demographic challenges we expect tightness in the labor market to remain an ongoing challenge for the foreseeable future.