The correction in the housing market is losing vitality—where 7 revised forecast models show where U.S. home prices will begin
Out in the West, the adjustment is particularly sharp EQUAL market alike Phoenix And Seattle saw house prices drop 10.4% and 16.3% respectively from their peak. In the eastern half of the country, the correction was much milder as several housing markets in the region, including Clevelandsaw the price drop less than 1% since the peak.
But the story has changed: As the housing market enters a busier spring period, the adjustment is losing steam.
Indeed, of the 200 largest housing markets tracked by zillow The Home Value Index, only 38% of the major market recorded a month-over-month decline in home prices in February. At the height of the correction in September, 79% of the market was down from the previous month.
Why so house price adjustment—which was absent from some Northeast and Midwest markets—out of breath?
For one thing, we’ve entered a seasonal period where demand increases. Monday, inventory in March is 49.5% lower than the level achieved in March 2019. The third day, Housing affordability has improved slightly in the past few months like mortgage interest rate was back below 7% and many markets saw home prices drop a bit.
That said, if mortgage rates remain above 6%, it’s possible the home price adjustment could regain traction as the housing market ends a busier spring and enters the season more slowly in the second half. end of the year.
To better understand where national house prices could go next, Luck rounded up revised forecasts from seven major research firms.
Core: The real estate research firm expects home prices in the US, measured in coreLogic HPI, to 3% increase from January 2023 to January 2024. If CoreLogic is correct, then U.S. home prices will end in 2023 back to the levels reached at the height of their boom in June 2022.
Zillow: Economists at the home listing website forecast that home values in the United States, as measured by the Zillow Home Value Index, will 1% increase from February 2023 to February 2024. This is Zillow’s regional outlook for more than 300 markets.
Mortgage Bankers Association: The trade group’s latest forecast for US home prices, as measured by the US FHFA Home Price Index, down 0.6% in 2023 and further decrease by 1.4% in 2024. It then projects nationwide home prices to increase 2.1% by 2025. “While we still describe the path of the nationwide home price index as flat, we do. now forecast that home prices across the country will fall for several quarters compared with the same period last year. . We were anticipating some pretty significant declines in the western and mountainous areas of the country.” write researchers at the Mortgage Bankers Association.
Goldman Sachs: Investment bankers expect home prices in the US, as measured by Case-Shiller, ARRIVE down 2.6% in 2023. Goldman Sachs says that would take us to a 6% peak-to-trough drop. “On a regional basis, we anticipate larger declines across the Pacific Coast and Southwest region—the regions with the largest average inventory increases—and more modest declines across the region. Mid-Atlantic and Midwest—regions that have maintained higher affordability over the past few years,” wrote the Goldman Sachs researchers.
Fannie Mae: Economists at the company predict that home prices in the United States, measured in Fannie Mae HPI, will down 4.2% in 2023 and another 2.3% decrease in 2024. Fannie Mae is currently modeling an average 30-year fixed mortgage rate of 6.5% in 2023 and 5.9% in 2024.
Moody’s analysis: The company expects home prices in the US, as measured by the Moody’s Analytics Repetitive Home Price Index, to down 4.2% between Q4 2022 and Q4 2023. In total, Moody’s expect a peak-to-trough US home price decline of 10%. If a recession hits, Moody’s will predict a 15% to 20% drop in house prices from top to bottom.
KPMG: The Big Four accounting firm expects home prices in the US, as measured by Case-Shiller, to 8% off in 2023. If Latest forecast of KPMG right, the U.S. housing market in 2023 will soon experience its steepest home price decline since 2008, a year that saw home prices nationwide plummet 11.9%.
The chart below shows the range between the most bullish forecast for 2023 (via CoreLogic) and the most bearish forecast for 2023 (via KPMG).
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