A wave of housing forecast updates point the same way: up
Researchers from Zillow, Freddie Mac, and Goldman Sachs all issued revised, rising 2023 home value and price forecasts in the past week.
Key points:
- Zillow researchers expect national home values (including homes that are not for sale) to rise 5.8% this year.
- Home prices, meanwhile, will gain just 0.8% in the next 12 months, according to Freddie Mac researchers.
- Goldmans Sachs revised its 2023 home price outlook from negative 2.2% to positive 1.8%.
With only a handful of months left in the year, real estate market researchers from different segments of the industry have started issuing revised forecasts for 2023 and beyond.
The latest forecast comes from Zillow, which anticipates home values will appreciate in 2023. Specifically, the company said that it sees its national Zillow Home Value Index (ZHVI) increasing 5.8% this year over last. This adjustment is a slight gain from the 5.5% home value growth in 2023 that Zillow had predicted last month.
Additionally, Zillow researchers said that they expect typical home values — which include homes that have not been listed for sale — to improve by 6.5% between July 2023 and July 2024.
Tight inventory and elevated mortgage rates are a big reason for the adjustment, Zillow researchers said, adding that they expect 4.2 million home sales to occur this year. While that figure would be in line with a typical year, they noted, it does represent a 17% decline from 2022.
Freddie Mac also unveiled its latest housing market outlook, where it signaled that "a demand-supply imbalance in the U.S. housing market has led to a rebound in home prices." While Freddie Mac's most recent House Price Index (FMHPI) is from July 31, researchers did note that the 0.7% increase for June was the first upward movement after falling seven months in a row.
However, over the next 12 months, Freddie Mac sees home prices rising by 0.8%, and an additional 0.9% in the following 12 months. "This is more optimistic than earlier in the year mainly due to the rebound in prices after the house price declines in the second half of 2022," Freddie Mac researchers said.
Despite the softening labor market and ongoing volatility in Federal Reserve monetary policy, Freddie Mac researchers predict that the generational buying trend the market has witnessed in the last few years will continue.
"We believe the rebound in prices is driven by a combination of very tight supply and the large cohort of Millennial first-time homebuyers reaching prime homebuying age. It is evident that despite affordability issues, there is tremendous demographic-driven demand for houses relative to supply, which will continue to keep upward pressure on prices," the report read.
And finally, global finance giant Goldman Sachs has also weighed in with a widely publicized revised forecast for U.S. home prices, which continue to resist the pressure of rising interest rates.
Last week, the company released a report which raised its outlook to positive 1.8% for 2023 versus the previously anticipated negative 2.2%, numerous outlets reported. Additionally, Goldman researchers said that they are now expecting home prices to rise by 3.5% in 2024 instead of the previously anticipated 2.8%.