In a promising turn of events for potential homebuyers, Zillow’s latest forecast indicates that home prices are anticipated to decline in 34 out of the 50 largest cities in the United States from November 2023 to November 2024.
The projection, relying on Zillow’s Home Value Index, which represents the “typical home value for a region,” brings a glimmer of optimism to those aspiring for more affordable housing options in the coming year.
Various factors contribute to this forecast, with a primary driver being the limited supply of homes in the market.
While interest rates play a role in constraining the supply, the overarching issue in the United States appears to be a lack of demand.
Sellers are adjusting their asking prices downward as they grapple with the challenge of finding willing buyers in the current market environment.
High mortgage rates are proving to be a significant hurdle, sidelining potential homebuyers who either lack the financial means or are hesitant to commit to the higher costs associated with purchasing a home in the present climate.
Homeowners, who might otherwise list their properties for sale, are reluctant to do so, as this would thrust them into the role of buyers in a challenging market characterized by elevated prices and interest rates.
The housing market outlook for 2024 is a topic of debate among experts.
Major firms, including Fannie Mae, have put forth varying predictions. Fannie Mae not only anticipates a decline in mortgage rates to 6.7% in 2024 but also foresees a further drop to 6.2% in 2025.
While these lower rates, although still comparatively high to the sub-3% rates seen around 2020, might encourage more buyers to enter the market, LendingTree offers a contrasting view.
LendingTree predicts that despite the potential decrease in mortgage rates, sluggish sales may persist due to the continued relatively high home prices.
As the year unfolds, the housing market remains a dynamic landscape with evolving trends and varied forecasts.