Source: Yahoo! Entertainment —
There’s no doubt about it: We’re in a sharp housing market downturn.
Across the country, mortgage brokers and builders are scrambling as millions of potential buyers sit on the sidelines after last year’s historic mortgage rate shock. The numbers aren’t pretty: On a year-over-year basis, mortgage purchase applications are down 36.4% and existing home sales have fallen 35.4%.
While home transactions went into free fall in the second half of 2022, home prices have felt less of an impact. Through October, seasonally adjusted U.S. home prices were down just 2.4%, as measured by the Case-Shiller National Home Price Index. On one hand, that marks the second biggest home price correction of the post-WWII era. On the other hand, it’s mild compared to the 26% peak-to-trough U.S. home price crash from 2007 to 2012.
In the future, Moody’s Analytics chief economist Mark Zandi expects the story to begin to change: The free-fall in home sales will soon bottom out, while the home price correction will carry on.
By the time U.S. home prices bottom out, Zandi expects them to be 10% below the 2022 peak. He isn’t the only economist who thinks home prices will continue to fall: Among the 24 major housing forecasters tracked by Fortune, 17 predict that U.S. home prices will decline further in 2023. (Another seven firms think U.S. home prices will remain flat or rise by a low single-digit amount in 2023).
