Where are Home Prices heading this Summer?
Home prices, which soared for most of the pandemic, are in the midst of their biggest decline since 2012. Multiple data shows the median sale price in the U.S. was $400,528 in March, 3.3% lower than the median in March 2022.
Some are even saying in new reports it now expected home prices to fall further heading into the halfway point of the year.
There are many reasons for the slump in prices. Some prospective buyers are waiting to make their home purchase until mortgage rates fall, which is reducing demand for homes and allowing for prices to decline.
Complicating matters, the supply of homes for sale is low largely because many owners feel trapped in their current residences because they’re locked in with low mortgage rates. These factors are all making the market difficult for would-be homebuyers and sellers alike.
What experts say
The economists aren’t the only housing experts who expect home prices to keep falling in 2023.
The National Association of Realtors forecasts that median home prices will decline 1.8% this year, but turn around and rise 2.8% in 2024, according to a new report. The expensive West region of the U.S. will see lower prices, but the affordable Midwest region will likely squeak out a positive gain.
Others are forecasting a 5-10% decline in home prices in the next two years. In their view, a relatively slow decline is more likely than a sharp drop in home prices.
Strategists believe the housing cycle is bottoming as the low inventory of homes for sale is preventing prices from falling steeply. However, the investment bank doesn’t foresee the market getting crazy hot again any time soon.
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