Heading into 2023, most housing analysts were on the bearish side. Among the 27 major forecasters, 23 expected national home prices to fall in 2023 under the weight of spiked mortgage rates. However, through the first few months of 2023, these bearish views haven't manifested.
Case in point: After declining for seven straight months between June and January, national home prices as tracked by the seasonality adjusted Case-Shiller National Home Price Index rose 0.2% in February.
What's going on? Almost immediately this year, housing demand improved as the housing market entered into its stronger seasonal period coupled with just enough affordability relief as mortgage rates fell back under 7%. That slight demand improvement, coupled with still tight inventory levels, put the national housing market back into equilibrium this spring. Cue rising house prices this spring in many markets.
View this interactive chart on Fortune.com
As demand improved back in January, many housing analysts began to revise their home price outlooks upward for 2023. Look no further than Fannie Mae, which came into 2023 expecting national house prices to fall 4.2% in 2023. However, Fannie Mae now expects just a 1.2% national house price decline this year.
To better understand where national home prices might head next—and if the housing market can remain stabilized as it moves into the slower seasonal period this summer and fall—Fortune rounded up revised forecasts from nine major research firms.
CoreLogic: The real estate research firm expects U.S. home prices, as measured by the CoreLogic HPI, to rise 4.6% between March 2023 to March 2024. If CoreLogic is right, then U.S. home prices would end 2023 back at price levels achieved at the height of the boom in June 2022. "While housing markets across the country continue to send mixed signals, prices in many large metros appeared to have turned the corner," wrote Selma Hepp, chief economist for CoreLogic, in a report published earlier this month. (Forecast updated on May 2, 2023.)
Zillow: Economists at the home listing site forecast that U.S. home values, as measured by the Zillow Home Value Index, will rise 1.7% between March 2023 and March 2024. "April data indicate that housing has returned to a seller’s market. Buyers flock to open houses at this time of year in hopes of securing a home in time to move in by early summer, yet this year will see far fewer new listings than normal, too," wrote Zillow economists in a report published on Monday. Here is Zillow's regional outlook for over 300 markets. (Forecast updated in April 2023.)
Bank of America: Economists at the investment bank forecast that U.S. home prices will shift 0% in 2023. "We project flat growth for 2023 as we reach close to equilibrium levels in terms of constrained affordability meeting reduced supply... Areas of concern: Phoenix, Austin, Las Vegas -> Significant supply coming online with USPS data showing some outward migration," wrote BofA economists in a report published earlier this month. (Forecast updated on May 1, 2023.)
Mortgage Bankers Association: The trade group's latest forecast has U.S. home prices, as measured by the FHFA US House Price Index, falling 0.6% in 2023 and another 1.4% dip in 2024. It then expects national home prices to rise 2.1% in 2025. (Forecast updated on April 17, 2023).
Fannie Mae: Economists at the firm predict that U.S. home prices, as measured by the Fannie Mae HPI, will fall 1.2% in 2023 and another 2.2% dip in 2024. That's a big upgrade from March, when Fannie Mae predicted national home prices would fall 4.2% in 2023 and another 2.3% dip in 2024. "Housing demand and home prices have proved more resilient than previously anticipated…this is due in large part to the “lock-in effect," in which existing homeowners are disincentivized from listing their homes and potentially giving up their lower mortgage rate," wrote Fannie Mae economists in a recent report. (Forecast updated on April 10, 2023.)
Morgan Stanley: The investment bank expects U.S. home prices to fall 4% in 2023. "In November, the [Morgan Stanley] housing team published a home price forecast calling for a decline of 4% this year. On balance, the incoming data have roughly tracked that forecast. A record-breaking decline in housing activity has not come with a commensurate drop in home prices—something that has also underpinned our generally optimistic outlook for both consumer balance sheets and consumer spending in the post-Covid recovery. Lack of supply has been the main factor underpinning home valuations," wrote Morgan Stanley in a report published in April. (Forecast affirmed on April 21, 2023.)
Moody's Analytics: The firm expects U.S. home prices, as measured by the Moody's Analytics Repeat Sales House Price Index, to fall 4.4% between the fourth quarter of 2022 and the fourth quarter of 2023. In total, Moody's model expects a peak-to-trough U.S. home price decline of 8.6%. (Updated forecast provided to Fortune in May 2023.)
Goldman Sachs: The investment bank expects U.S. home prices, as measured by Case-Shiller, to fall 6% in 2023. "Housing affordability has been a key determinant of regional home price variance; even with falling Treasury yields, affordability levels in underperforming [Western] markets remain very poor. In our view, metro-level home prices will be more instructive than national prices when monitoring mortgage credit stress," wrote Goldman Sachs researchers in a recent report. (Forecast updated on April 5, 2023.)
KPMG: The Big Four accounting firm expects U.S. home prices, as measured by Case-Shiller, to fall 8% in 2023. If KPMG's latest forecast is right, the U.S. housing market in 2023 would soon experience its sharpest home price decline since 2008, a year that saw national home prices plummet 11.9%. (Forecast updated in March 2023.)
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