Written by Roseanne Bradley,
30th August 2023

The US housing market is a hot topic at the moment, with analysts sharing expectations for house prices to cool in the coming months.

The image represents buyers weighing up the affordability of US homes

Find homes in the USA via our property portal.

What’s changed?

It’s no secret that property markets across the globe have suffered in the wake of high inflation and rising mortgage rates, which combined have made it harder for first-time buyers to get on the property ladder.

US inflation accelerated to 3.2% in July this year, from 3% in June. This was the first increase in inflation for 12 months, suggesting the Federal Reserve’s interest rate rises aren’t quite as effective as hoped.

House prices in the US had an average sales price of €513,000 in July 2023, from 507,300 in June just a month earlier. However, this is not the most expensive average we’ve seen, and the 2023 average is significantly lower than this time last year, which was over €520,000.

“It is currently still a seller’s market but there are opportunities for prepared buyers”

US mortgage rates

Mortgage rates rose in the first week of July, jumping 6.96% by mid-month. this came as policymakers at the Federal Reserve voted to raise interest rates by 25 basis points in its July meeting.

The Federal Reserve’s interest rate policy indirectly impacts long-term loans, such as 30-year mortgages. The rate range at the time of writing is 5.25% to 5.5%, and economists expect the rate to remain unchanged in the central bank’s next meeting in September.

But what does that mean for mortgage rates?

Well, with the US interest rate significantly above the central bank’s 2% target, Jerome Powell, chair of the Federal Reserve, suggested the US economy is yet to feel the full impact of the Bank’s actions to tame high inflation.

The Fed’s June terminal rate projections foresee that interest rates will reach 5.6% by the end of 2023, suggesting at least one more rate hike this year. However, mortgage experts believe mortgage rates will remain above 6% for the foreseeable future.

Suburban Florida – could your forever home be there?

Late 2023 outlook for US homes

In Freddie Mac’s Housing and Mortgage Market Outlook, released in May, the report maintains a cautious outlook due to the potential impact of a weakening economic environment and employment. The company’s corporate forecast predicts a 2.9% decline in house prices by Q1 of next year. After that, forecasts expect an additional 1.3% decline.

It’s worth noting that the US housing market is much better than it was a decade ago. And the good news is that experts do not foresee a crash in 2023. Rising rates are on the decline and house prices are continuing to rise, but at a much slower rate than we’ve seen in the past.

Read more like this: 6 exciting places to buy in the USA

How to be a prepared US buyer

Do you know how you plan to buy your dream property in the US? Whether you’re a cash buyer or would prefer to purchase an off-plan property and benefit from a longer-term payment schedule, it will pay off to speak to a currency specialist as soon as possible.

It’s never too early to speak to a currency specialist if you’re a UK buyer interested in buying property in the USA.

Here at USA Property Guides, we recommend Smart Currency Exchange. They specialise in overseas property transactions and have a range of services that are well-suited to home buyers.

For those thinking, ‘Surely it’s too early for that,’ it might not be! You can lock in a preferred exchange rate with a Forward Contract for up to 12 months, which could save you money down the line.

Register with Smart Currency today to kickstart your property plans  

Sources: Trading Economics, Forbes Advisor, Norada Real Estate, Fortune, New York Fed.

Download the USA Property Guide

Download your free USA property guide

Our guide to buying a house in America is readily available online, but you can also a PDF version to view when you're offline or print. Simply fill in the form to the right and you'll be able to download your free copy.

  • Ask the right questions
  • Avoid the legal pitfalls
  • Find your property
  • Avoid losing money
  • Move in successfully

Download your free USA property guide

  • We handle your data with care and only ever as outlined in our Privacy Policy.

  • This field is for validation purposes and should be left unchanged.

Pin It on Pinterest