The following article includes views from Reports on Housing by Steven Thomas and other economic experts. It is not a reflection of the opinions, views, or predictions of Nuvision and its representatives. 

While housing market news has been anything but encouraging over the last year, some experts say that we may see a positive shift in the market. In fact, according to real estate brokerage Redfin, homebuyer demand continues to increase, and seller activity is also picking up.

Pending home sales posted their smallest decline since September during the four weeks ending February 5, falling 20% from a year earlier, and mortgage-purchase applications rose 3% from a week earlier, Redfin said in a press release.

According to Steven Thomas, after an extremely slow end to 2022, the housing market seems to be making a comeback. Thomas says, "A month ago, open houses were empty, showings were light, and there was little real estate activity as everyone's collective brains were still in a holiday fog. Seemingly overnight, buyers have returned, demand has surged higher, and market times have plunged."

While he saw a number of positive signs in the market, he offered a warning to both buyers and sellers:

A WARNING TO SELLERS: Home values are NOT climbing right now. Overpricing a home in this market will result in a lack of success and waste valuable market time. Until rates fall considerably from here to at least the mid-5s, home values will not rise.

A WARNING TO BUYERS: Lowball offers to purchase and looking for a "deal" will be an exercise in futility. Due to the high mortgage rate environment, the market has lined up in favor of buyers up to this point. That advantage is diminishing with the significant drop in market times. Sellers are not desperate and are not panicking to sell. Carefully arriving at an offer to purchase based on a home's Fair Market Value is a winning formula for isolating a home.

What about Home Prices?

In an interview with Business Insider, real-estate veteran and board member of the Mortgage Bankers Association Jeff Taylor said he expects U.S. home prices to fall further this year as the Federal Reserve pushes ahead with interest-rate increases.

"I anticipate on a national level, this year, we'll probably see a four to 6% price decrease. And in some markets, you know, you might see seven to nine," Taylor told Insider. The forecast implies a second straight year of home-price declines, after the Fed raised benchmark borrowing costs from near zero to almost 5% over the past 11 months to rein in inflation.

Fannie Mae's latest economic forecast predicts home prices dropping by over 6% in the next two years. They said, "This year is expected to manifest an ongoing correction in housing market affordability as we expect household incomes and housing costs to gradually approach a more sustainable relationship. We project that the combination of declining home prices, lower mortgage rates, and, with time, growing household incomes will eventually place the housing market in a recovery. The same dynamic holds for rents. However, we believe this process is likely to take multiple years."

Is rental relief right around the corner?

According to Redfin, housing market affordability is starting to ease for renters, with rents rising at their slowest rate in 20 months. "We're watching closely to see whether rents start falling year over year. That would be a welcome relief for renters because it hasn't happened since the onset of the pandemic," Redfin chief economist Daryl Fairweather said in a press statement. "If rents do start falling on a year-over-year basis, it will mean that renters have more room to negotiate," Fairweather added.

But uncertainty still seems to be the only certainty.

"By Super Bowl weekend, we usually have a good idea how a given year's housing market will play out. But this year is anything but typical," said Redfin Economics Research Lead Chen Zhao. "This year is more uncertain than most because the effects of last year's rapid rate hikes are still flowing through the economy, and we're not sure how much more the Fed will raise rates this year. So even after the Super Bowl comes and goes, we'll be closely monitoring the Fed's words and actions, along with inflation rates and indicators about the health of the labor market for signals that could affect homebuyer demand."

Have Questions? We want to help you find the answers.

You are invited to participate in our exclusive LIVE Economic Forecast series, where we will help answer your questions and provide you with the knowledge you need to make intelligent financial decisions that will help ensure your success.

Join us as we bring in economic expert Dr. Christopher Thornberg of Beacon Economics for an informative series of LIVE webinars to answer all of your questions and tell you where he sees the economy heading in 2023. An expert in economic and revenue forecasting, regional economics, economic policy, and labor and real estate markets, Dr. Thornberg has consulted for private industry, cities, counties, and public agencies throughout the country.

Click here to register for our exclusive webinar on March 8 at 5 PM PST/ 4 PM AKST.