US Home Prices May Decline, Say Experts
Two leading experts, Moody’s Chief Economist Mark Zandi and Redfin CEO Glenn Kelman, have predicted a potential decline in US home prices. According to Zandi, this could be necessary to revive a stagnant housing market that may take years to recover.
Zandi emphasized the need for mortgage rates to decrease, incomes to improve, and the avoidance of a recession for sales to increase. He also suggested that house price declines may be inevitable. Kelman echoed similar sentiments, stating that a drop in home prices seems not only possible but likely.
The housing market has faced challenges this year due to the Federal Reserve’s interest rate hikes, leading to two-decade high mortgage rates. This has caused homeowners with cheaper rates to hesitate in selling, while prospective buyers have been priced out of the market, waiting for rates to fall.
Zandi pointed to new data showing a significant drop in annualized sales of previously owned homes, reaching the lowest figure in 13 years. He stressed that the housing market is facing significant demand challenges.
Moreover, the surge in house prices and higher mortgage rates have led to an affordability crisis, causing transaction volumes to decline. Zandi warned that a full recovery may not be expected until 2025 or 2026.
However, Kelman offered a more optimistic outlook, noting an increase in housing inventory as more people list their homes and sellers lower their prices. He believes this shift could spur sales, signaling a potential turnaround in the market.
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