Although talking abouthousing stagnation,“Don’t hold your breath waiting for housing prices to drop suddenly any time soon. In fact, prices are expected to grow through 2023, according to several housing forecasts.
However, the market appears to be cooling. As mortgage costs rise, home sales in the US have fallen above 20% from a year ago. And last month, the median price of an existing home in the United States fell from a record $413,800 to $403,800, According to the National Association of Realtors (NAR).
But given that average home prices have gone up about 36% Since the pandemic began, a one-month price cut of about 2.4% can be considered more of a market adjustment than a significant drop in value.
Home prices are still expected to rise 11% for 2022, followed by 2% in 2023, according to NAR. Latest predictions. This follows similar expectations from before Freddy MacAnd the Fannie Mae And the Zillowwhich expects positive – albeit slow – price growth in 2022 and 2023.
And despite slowing price growth, median home prices are still 10.8% higher than a year ago, according to NAR data. For example, median home prices have risen roughly 4.5% annually since 1992, according to Federal Housing Finance Agency data.
“This is not a slump in home prices,” says Lawrence Yun, NAR’s chief economist. “A nationwide drop in prices is unlikely.”
This is because the demand for homes remains strong, primarily due to strong employment numbers and an “inadequate” supply of homes.
However, for some local markets that have experienced extraordinary price growth in the past two years — such as in California — a drop in prices is possible, Yoon says. But “these price dips will be very short in duration,” because the dips will be seen as a “second chance chance” by buyers who were previously priced out of the market.
This appears to be already happening in some real estate markets where prices have skyrocketed during the pandemic. In July, home prices fell in San Jose by 4.5%, Phoenix by 2.8%, San Francisco by 2.8% and Austin by 2.7%, According to the latest data provided by Zillow.
However, “there is no indication that prices will fall in more affordable markets,” Yoon says. Of course, he adds, forecasts do not take into account unexpected events, such as geopolitical conflicts or worsening supply chain problems.
Home prices are likely to fall, but “as mortgage rates stabilize, and some jobs are created, home prices should also stabilize,” Yoon says.
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