A year ago, housing and economic researchers were largely aligned in their predictions of a looming recession, expecting lower interest rates by the end of 2023 thanks to likely cuts from the Federal Reserve and moderating or even negative home price growth.  

Twelve months later, the recession is taking its time to arrive, mortgage rates are almost half a percentage point higher and prices continue to head upward. 

Economic forecasts can serve as an important resource businesses in the housing market turn to when planning spending for the year ahead. When the best-modeled predictions miss the mark, the effect can leave an outsized dent on the bottom line. 

"In some cases, you budget off of that from a production standpoint,"  said Kenny Hodges, CEO of Assurance Financial. "If you budget your production off of that, then you budget your revenue and you budget your personnel, staffing, your expenses."

Mortgage companies might be forgiven if they are treating the 2024 outlook with some skepticism. "It's funny, all the same forecasts that I'm hearing right now from the economists — it's the exact same forecast that we got last year. It just didn't pan out for 2023," Hodges said.

What made the past 12 months challenging to accurately gauge was the lingering effect of Covid-19 on the U.S. economy. "A lot of the economic theories that we work with when we develop these forecasts, to some extent, have been broken," said Selma Hepp, chief economist at Corelogic. 

This past year has been exceptional for the stark difference between the predictions and the reality of the housing market at the end of 2023. Several mortgage leaders took a look back to share their opinions about the forecasts that blew off course and hit the mark.