The 2022 housing market was defined by two key things: inflation and rapidly rising mortgage rates. In many ways, it put the housing market into a reset position. As the Federal Reserve tried to lower inflation, mortgage rates more than doubled– something that's never happened before in a calendar year.
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This has had a cascading impact on buyer activity, the balance between supply and demand, and ultimately home prices. And as all those things changed, some buyers and sellers put their plans on hold and decided to wait.
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Moving forward, experts agree it's still going to be all about inflation. If inflation is high, mortgage rates will be as well. But if inflation falls, mortgage rates will likely respond. Right now, experts are factoring all of this into their mortgage rate forecasts for 2023. And if we average those forecasts together, experts say we can expect rates to stabilize a bit more this year. Whether that's between 5.5% and 6.5%, it's hard for experts to say exactly where they'll land. But based on the average of their projections, a more predictable rate is likely ahead. And we could see rates tick down if inflation continues to drop.