The Forecasted Path of the U.S. Housing Market in 2023: A Look at Nine Major Predictions

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As the calendar turned to 2023, the overall sentiment surrounding the U.S. housing market leaned towards a bearish outlook. Most forecasters anticipated a dip in national home prices, attributing this to the surge in mortgage rates. Yet, as we ventured into the first five months of the year, these predictions remained largely unfulfilled.

In fact, following a seven-month consecutive decline from June to January, the seasonality adjusted Case-Shiller National Home Price Index recorded a 0.2% increase in February. The key question on everyone's mind is, of course, why? The housing market has traditionally shown more strength during the early part of the year, and this year was no different. The combination of a small but notable drop in mortgage rates, bringing them back under 7%, and the improved housing demand, resulted in the stabilization of the national housing market. This balance has been the catalyst for rising house prices in many markets this spring.

The uptick in demand from January led several housing analysts to revise their 2023 home price predictions. For instance, FannieMae initially forecasted a 4.2% drop in national house prices for the year. However, they've now moderated their prediction to a decline of just 1.2%.

For a clearer understanding of potential trends in national home prices and the stability of the housing market as we head into the slower seasons of summer and fall, let's examine the revised forecasts from nine major research firms:

Real estate research firm CoreLogic anticipates a 4.6% rise in U.S. home prices, as measured by the CoreLogic HPI, between March 2023 and March 2024. If their predictions hold, U.S. home prices by the end of 2023 will align with the peak levels seen in June 2022.

Zillow forecasts a 1.7% increase in U.S. home values between March 2023 and March 2024, according to the Zillow Home Value Index. They believe that the housing market has shifted back in favor of sellers due to a drop in new listings compared to previous years.

Bank of America predicts no change in U.S. home prices in 2023, indicating a balance between constrained affordability and reduced supply. Areas of concern include Phoenix, Austin, and Las Vegas due to the anticipated increase in supply and some outward migration.

The Mortgage Bankers Association forecasts a 0.6% fall in U.S. home prices in 2023, followed by another 1.4% dip in 2024, according to the FHFA US House Price Index. However, they expect a rebound with a 2.1% rise in 2025.

Fannie Mae predicts a 1.2% drop in U.S. home prices in 2023, followed by a further 2.2% dip in 2024. This represents a significant shift from their earlier prediction of a 4.2% drop in 2023 and a 2.3% dip in 2024.

Morgan Stanley anticipates a 4% drop in U.S. home prices in 2023. The bank notes that despite a record-breaking decline in housing activity, there hasn't been a corresponding drop in home prices. The main factor supporting home valuations, according to them, has been the lack of supply.

Moody's Analytics predicts a 4.4% decline in U.S. home prices between the fourth quarter of 2022 and the fourth quarter of 2023, as per the Moody's Analytics Repeat Sales House Price Index. In total, they expect a peak-to-trough U.S. home price decline of 8.6%.

Goldman Sachs expects U.S. home prices, as tracked by Case-Shiller, to fall by 6% in 2023. Despite falling Treasury yields, they note that affordability levels in certain markets remain poor, suggesting that metro-level home prices will be more indicative of mortgage credit stress than national prices.

KPMG, one of the Big Four accounting firms, forecasts an 8% drop in U.S. home prices in 2023 according to the Case-Shiller index. If this forecast holds, the U.S. housing market would experience its most significant home price decline since 2008, a year that witnessed national home prices plummet by 11.9%.

These varied predictions underline the complexity and fluidity of the housing market. As we move further into 2023, factors such as housing demand, supply constraints, mortgage rates, and broader economic trends will continue to shape the trajectory of home prices. The housing market has shown resilience so far this year, defying early bearish predictions. Whether this trend continues remains to be seen, but what's clear is that the market's dynamics will continue to offer ample opportunities and challenges for buyers, sellers, and investors alike.


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Our team of dedicated Content Specialists at creates insightful and engaging content about the real estate market. With backgrounds in journalism and a passion for helping people navigate the complexities of buying and selling homes, our writers bring a wealth of knowledge and expertise to every article.

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