from
https://www.businessinsider.com/us-housing-market-home-prices-outlook-zillow-mortgage-rates-inventory-2023-9

Home prices could jump 5% in the next 12 months as high mortgage rates
freeze the housing market, Zillow economists say

Jennifer Sor Sep 22, 2023, 12:17 PM PDT
Home prices
Home prices will jump by 4.9% by August of next year, Zillow economists
warned. Photo by Joe Raedle/Getty Images
Home prices could climb even higher over the next year, Zillow
economists said.
The real estate listing company predicted a 5% home price increase,
lower that 6.5% is previously predicted.

Ge
Home prices could jump as much as 5% over the next year, thanks to
higher mortgage rates prolonging the deep freeze of the US housing
market, according to Zillow economists.

The real estate listings site revised its 12-month outlook for home
prices, predicting a 4.9% increase by August 2024. That's slightly down
from its 12-month home price outlook in July, when the firm predicted a
6.5% increase in home prices by July of next year.

Meanwhile, the firm expected total home sales to clock in around 4.1
million this year, slightly down from the previously anticipated 4.2
million.

"Zillow's forecast of the nation's typical home value was revised
downward this month due to the anticipation of higher mortgage rates and
a slight decrease in market tightness," economists said in a note
published Monday.

The Fed didn't help the outlook for rates this week. At the conclusion
of its September policy meeting on Wednesday, chairman Jerome Powell
said that the central bank wouldn't hike rates again this month but
warned that they could remain elevated for longer.

That's tough news for prospective home buyers, who have watched mortgage
rates march steadily higher for over a year, partly as a result of the
Fed's tightening of monetary policy.

While borrowing has become more expensive, high mortgage rates also
discourage homeowners from listing their properties for sale as they
cling to low rates secured years ago, exacerbating the shortage of
supply and pushing up prices.

According to Bankrate, the 30-year fixed mortgage rate climbed 24 basis
points in the last week to 7.75%. Meanwhile, the latest Case-Shiller
home price data shows home values climbing back to near all-time-highs
during the month of August.

Inventory levels, though, have increased slightly, which was a cited as
the reason why Zillow chose to downgrade its home price forecast. New
listings jumped 4% last month, which could help ease supply pressures
and cap home price increases over the next year.

"To be clear, August's new listings total – as well as total for-sale
inventory – remains well below typical levels seen prior to the
pandemic, and inventory conditions remain very tight.That said, this
unusual late-summer uptick helped to ease the market conditions some,
causing our outlook for home values to cool," economists added.

Experts have warned housing affordability is unlikely to improve until
mortgage rates dial back more significantly. That could unlock more
inventory to hit the housing market, but it's unlikely to happen anytime
soon, with experts forecasting mortgage rates to end the year around 6%.

Read next

MARKETS
Zillow thinks US home prices are set to surge more than 6% in the next year

Watch: One in every 10 Americans moved during the pandemic. Here's where
they went.
Housing Market
Home Prices