Decoding Home Prices and Mortgage Rates: Key Considerations for Homebuyers

Lisa Mailhot  |  July 5, 2023


Decoding Home Prices and Mortgage Rates: Key Considerations for Homebuyers


If you're in the market for a new home, it's essential to stay informed about the ever-changing housing market landscape. With a barrage of information coming from various sources such as news outlets, social media, real estate agents, and everyday conversations, it can be challenging to filter out the noise and focus on what truly matters. When making your decision, there are two crucial questions you should ask yourself regarding home prices and mortgage rates. Let's delve into the data to find the answers you need.

1. Anticipating Home Prices: Where Are They Headed?

To gain insight into future home prices, a reliable resource is the Home Price Expectation Survey (HPES) conducted by Pulsenomics. This survey compiles the opinions of a national panel consisting of economists, real estate experts, and investment and market strategists. The latest release suggests a minor depreciation for the current year, as indicated by the red in the graph below. However, it's crucial to consider the broader context. The worst declines in home prices are now in the past, and many markets are experiencing renewed appreciation. Moreover, the projected 0.37% depreciation for 2023 is far from the catastrophic crash that was initially feared.

Looking ahead, the green in the graph reveals a positive turn, with prices expected to appreciate in 2024 and beyond. Following this year, the HPES predicts a return to more normal levels of home price appreciation over the next several years.



Why does this matter to you? It implies that purchasing a home now is likely to result in value growth and increased home equity in the coming years. However, if you delay your decision, the forecasts suggest that the same home will cost you more later on.

2. Projecting Mortgage Rates: Where Are They Headed?

Over the past year, mortgage rates have risen due to economic uncertainties, inflationary pressures, and other factors. However, recent reports indicate a moderation in inflation, which is an encouraging sign for the market and mortgage rates. Typically, when inflation subsides, mortgage rates tend to follow suit and decline. As a result, some experts suggest that mortgage rates may experience a slight pullback over the next few quarters, stabilizing around an average range of approximately 5.5% to 6%.


Nevertheless, even experts cannot provide absolute certainty about future mortgage rates due to the multitude of factors at play. To understand the range of possibilities, it's essential to consider the following scenarios:

  • If you buy now and mortgage rates remain unchanged: Congratulations, you've made a wise move as home prices are projected to rise, enabling you to stay ahead of increasing costs.
  • If you buy now and mortgage rates decrease (as projected), your decision is still favorable, as you acquired the property before home prices experienced further appreciation. Plus, you have the option to refinance if rates become more favorable in the future.
  • If you buy now and mortgage rates increase: In this scenario, you've made an excellent decision by purchasing the property before both home prices and mortgage rates climbed.

Bottom Line

If you're contemplating buying a home, it's crucial to have accurate information about home prices and mortgage rates. While no one can predict the future with certainty, expert projections can provide valuable insights to keep you well-informed. Reach out to a professional in your local market who can offer an expert opinion and guide you through the process.

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