Economist Robert Shiller, who predicted the 2008 housing crash, thinks home prices could decline 10%. Modest 2023 home price declines are also forecasted by Capital Economics, Zelman & Associates, and Zonda. John Burns Real Estate Consulting isn’t the only firm feeling a bit bearish. “That’s exactly what we’re all seeing right now.” “You could make a strong case that in a lot of housing markets the last 10% of home price appreciation was purely aspirational and irrational, and that’ll come off the top really fast,” Palacios says. He believes the home price drops suggest that some frothy markets, like Phoenix and Boise, have already seen their home price tops "blown off" and are on a path toward year-over-year price declines in 2023. Rick Palacios Jr., head of research at John Burns Real Estate Consulting, tells Fortune we should be looking at month-over-month shifts. Normally it's in bad taste to focus too much on month-over-month home price shifts. Instead, it views this as a housing market trying to find equilibrium amid a period of spiked mortgage rates.
On multiple occasions this summer, Zillow has affirmed its view that we're in neither a housing bubble nor a housing crash. The current slowdown is prompted by the collision of extreme price growth during the early and mid-pandemic with the sudden increase in mortgage rates since December-a combination that swiftly weakened would-be homebuyers’ ability to afford or qualify to purchase their next house," writes Zillow chief economist Skylar Olsen. "While the recent decline in prices is a notable development, the housing market is still far from a return to normal conditions. That includes a 4.5% home price dip in San Jose. There's another reason that Zillow might be feeling a bit more bearish: Its analysis finds some regional housing markets saw home price declines in July.Īccording to Zillow, 30 of the nation's 50 largest housing markets saw month-over-month home price declines in July. At the same time, single-family housing starts have fallen 18.5% and mortgage purchase applications are down 18.4%. On a year-over-year basis, new home sales and existing home sales are now down 17.4% and 20.2%, respectively.
The month saw the largest ever (dating back to 2016) uptick in total inventory on. However, home prices are still increasing, rising 7.7 percent in July 2022 compared to July 2021, the slowest pace since June 2020, Redfin reported.Across the board, the housing market weakened in July. Home sales in July dropped 4.1 percent compared to June for the sixth-straight monthly decline. This represents the “biggest annual decline in US home sales in more than a year, a reflection of the continued cooling effects of 5.4 percent-plus mortgage rates and nationwide economic uncertainty.” Home sales decreased 19.3 percent in July compared to July 2021 and are now at their lowest since the start of the covid-19 pandemic, according to real estate brokerage Redfin. It’s “a significant slowdown in annual home value growth,” Zillow said in a press release. Zillow revised its forecast for the growth in home values from the current rate of 16 percent to 2.4 percent through the end of July 2023. But sellers are seeing fewer offers and have to offer more concessions to entice buyers. This doesn’t count as a crash in housing prices because the typical home value is up 44.5 percent from July 2019 before the pandemic. No Doctor Visit Required, Get Policy for as low as $30 per Month On the downside, real GDP fell by 0.9 percent at an annualized rate in the second quarter – the second consecutive decline in 2022 – as consumer spending and corporate investment contracted.Īre you interested in getting smart on Life Insurance? Mortgage rates for prime borrowers are higher than last year but have recently leveled off. Inflation per the Consumer Price Index decelerated in July, which is expected to influence Federal Reserve policy decisions in the coming months.
On the upside, the labor market posted stronger-than-expected job growth and falling unemployment in July. “We’re witnessing a housing recession in terms of declining home sales and home building,” said Lawrence Yun, chief economist for the National Association of Realtors, in a recent report.Įconomic data is sending mixed signals for the economic outlook, Zillow reported. Buyers are canceling contracts as interest rates rise from less than 3.3 percent at the beginning of 2022 to 5.72 percent. The overheated housing market of a few months ago, with historically low interest rates and skyrocketing demand, appears to be cooling.
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