While all real estate, like all politics, is local, homeowners in general should expect no forward movement on housing prices until 2024, according to a new analysis.
Economists and housing experts polled in the latest Zillow Home Price Expectation (ZHPE) survey anticipate home prices to fall 1.6 percent through December before the turnaround begins. The reason? Affordability challenges are still dragging down demand for homes.
“The majority of experts are now predicting an outright decline in U.S. home prices in 2023,” said Terry Loebs, founder of Pulsenomics. “The 2022 rate spike – and the record-high mortgage costs it ushered in – continues to shake home-price expectations and market psychology.”
Starting next year, however, the panel foresees price growth picking back up, at an average clip of 3.5 percent per year through 2027 – the same rate that prices grew in the relatively stable period from 1987-99, before the housing boom and bust cycle in the 2000s.
“The housing market is resetting. Though we’re seeing early signs of renewed buyer interest early this year, prices should generally flatten out in 2023, helping buyers to catch up,” said Zillow senior economist Jeff Tucker.
“The sheer number of people in the first-time-homebuyer age range and a lack of inventory should limit price declines,” Tucker said. “A return to more normal growth would be welcome after the rollercoaster ride that home prices have been on lately.”
Sales of existing homes are forecast to fall to 4.2 million in 2023, down from 5 million in 2022.
The panel expects mortgage rates to trend downward after the first quarter. The median response projected a 6-percent rate for 30-year, fixed-rate mortgages at the end of 2023. While much higher than the 2020-21 period, that’s more in line with historic norms.
