AZ Business Magazine
Economists and housing experts polled in the latest Zillow Home Price Expectation (ZHPE) survey expect home prices to fall 1.6% through Dec. 2023. Affordability challenges are still dragging down demand for homes – lower mortgage costs in January translated into sales that tracked pre-pandemic trends, but higher rates in February have since dampened buyers’ enthusiasm.
Starting next year, however, the panel foresees price growth picking back up, at an average clip of 3.5% per year through 2027 – the same rate that prices grew in the relatively stable period from 1987-1999, before the housing boom and bust cycle in the 2000s.
Zillow’s latest in-house forecast calls for typical U.S. home values to be nearly flat, rising 0.2% over the course of 2023. The largest declines are forecast in expensive California metros.
“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. 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 – up slightly from November and December’s seasonally adjusted annual rate of sales, but lower than 5.0 million sales in the course of calendar year 2022.
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