U.S. home prices have been rising at a rate of 15% to 20% a year. In the next year or so, mortgage rates are going to keep rising, which will slow down the rise (see the lowest mortgage rates you can qualify for now here). Here’s what experts told us about what they think will happen to home prices both in the short and long term. This is what they said.
In the short term, how will home prices change?
People who work in the field say that home prices won’t slow down much in the near future. The truth is, May is usually one of the busiest times of the year for homebuyers. “As a result, this May could bring with it even less housing inventory and in turn, even more expensive homes,” says Jacob Channel, senior economic analyst for LendingTree, a lender. Steve Reich, the chief operations officer at Finance of America Mortgage, says that demand for homes is still very high, especially for young people who want to buy their first home. He thinks that home prices will rise “slowly but steadily” through May.
That’s what I want to know. It will be 21.2 percent in May, a Zillow economist says. That’s up from April. Jeff Ostrowski, a Bankrate.com analyst: “Because there aren’t many homes for sale, home prices are likely to keep rising at a double-digit rate year-over-year through May,” he says. The prices of homes seem to be going down a little, but not a lot.
Realtor.com senior economist George Ratiu says that “the imbalance between supply and demand is still a problem for spring real-estate markets.” Take a look here to see the lowest mortgage rates you can get right now.
Will home prices rise or fall over time?
It’s because mortgage rates have gone up, as well as other things, that some big players in the real estate world have changed their home-price growth predictions. Annual home value growth will be 14.9 percent over the next year, down from 16.5 percent in February. The Fannie Mae Economic and Strategic Research Group says that by the fourth quarter of 2023, growth will slow down to just 3.2%.
And Ratiu says that “real estate markets are moving toward a new normal.” Because the Federal Reserve is going to raise interest rates several times this year, as well as consider cutting back on its balance sheets, the process is already making borrowing more expensive. Home loan rates are going to keep going up, which will make it more difficult for people to get loans, says Ratiu. Take a look here to see the lowest mortgage rates you can get right now.
Another reason home prices may not rise as quickly as they used to is that experts say there will be more homes for sale. Ratiu: “Weekly inventory numbers are already seeing a rise in the number of new listings on Realtor.com, which is also slowing down overall inventory declines from a year ago. This is good news.” There should be more homes for sale than there were last year by this summer.
Zillow’s Bachaud says that at some point, the cost of buying a home will deter enough buyers to let inventory start to keep up with demand and bring home prices back down to earth. But there is still a lot of fuel left in the tank as the home-buying season starts up.
