Title: U.S. Home Prices Continue to Soar: Zillow Raises Forecast Amidst Limited Inventory Levels
Date: [Insert Date]
In a bold prediction made back in February, Zillow’s housing economists declared that U.S. home prices had reached their lowest point and would begin to climb by 0.5% over the next year. Fast forward to the present, and not only did home prices start to rise but they also reached a new all-time high, propelled by the strong demand resulting from limited inventory levels despite the mortgage rate shock.
This rebound in U.S. house prices coincided with Zillow’s repeated upward revisions of its home price forecast. The latest revision now predicts a 6.5% increase in U.S. home prices between July 2023 and July 2024, surpassing the 6.3% projection made just last month. It is crucial to note that U.S. home prices have historically experienced an average annual increase of 5.5% since 1975, as per Case-Shiller’s tracking.
Zillow’s housing economists attribute this ongoing surge to a scarcity of homes for sale, which has heightened competition among buyers despite elevated mortgage rates. Comparing July 2021 to the same month in 2019, the number of homes listed for sale dropped by over 50%, and there were 29% fewer new listings entering the market. As a result, homes that went under contract in July did so in just 12 days, almost a week and a half faster than in previous years.
According to Zillow’s forecast model, 120 out of the largest 400 housing markets in the United States are expected to see even higher increases of 7.0% or more in the next 12 months. These housing markets are dispersed across various regions, including the West (such as Santa Maria, California), South (Tampa), Midwest (Indianapolis), and Northeast (Scranton, Pennsylvania).
While Zillow, CoreLogic, and AEI Housing Center economists all believe that U.S. home prices have reached their bottom, not all firms share this sentiment. Experts from Moody’s Analytics and Morgan Stanley anticipate further declines in home prices, with a projected decrease taking place by the end of 2024.
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Sources:
– Zillow
– Case-Shiller
– CoreLogic
– AEI Housing Center
– Moody’s Analytics
– Morgan Stanley