House prices in the United States are in their longest downturn in more than a decade, with Case-Shiller statistics indicating that prices have recently declined for the seventh straight month.
The seasonally-adjusted S&P CoreLogic Case-Shiller National House Price Index, a measure of home prices across the nation, decreased 0.2% in January compared to December. This is the longest dip since 2012, with seven straight monthly declines.
In January, the index increased 3.8% year-over-year, which was slower than the preceding month’s pace of 5.6% and the weakest yearly increase since 2019.
The Federal Reserve’s vigorous push to raise interest rates over the last year has contributed to a substantial increase in mortgage rates, which has weighed on affordability and demand. Freddie Mac said that the average 30-year fixed rate was 6.42% last week, up from 4.42% a year ago.
Here is what analysts predict the housing market will do next.
Zillow
In response to Tuesday’s Case-Shiller reading, Jeff Tucker, a senior economist at Zillow, stated that January data indicated that time on market began to increase and pending home sales somewhat returned from November lows.
“As the market returns to life this spring, prices are likely to rise month over month, but fall year over year, compared to last year’s frenetic spring shopping season when buyers rushed to lock in lower mortgage rates,” he wrote in a note. “How much prices will rise from winter lows depends on whether mortgage rates stabilize and creep downward or remain high and volatile,” he added.
Strong MLS
It is likely that the combination of low inventory and sufficient levels of demand will prevent home prices from falling significantly in most local markets, barring a major recession.
Beazer Homes
Allan Merrill, the CEO of the homebuilding firm, stated that the United States faces a severe housing supply crisis. In conjunction with labor market limitations, relief looks years away.
“Long-term [the housing scarcity] puts a ceiling on the demand for newly built homes in our nation,” he told CNBC on Thursday. We just have a structural deficit, and I don’t see any procedures in place that are likely to repair it in the near future.
National Association of Real Estate Professionals
Nadia Evangelou, senior economist and director of research at the NAR, stated in an interview with Insider earlier this month that the collapse of Silicon Valley Bank and the accompanying instability in the banking sector might stimulate the home market.
She added that mortgage rates might fall quicker than anticipated, allowing more Individuals to consider purchasing a home as affordability improves.
“We had anticipated that mortgage rates would fall to the lower end of the 6 percent range somewhere in the second half of 2023, but we may see this level in the following weeks,” Evangelou said. The housing market responds swiftly to changes in mortgage rates, and we anticipate an improvement in affordability.