Zillow Predicts Over 6% Surge in U.S. Home Prices in the Next Year
Zillow economists project a surge of over 6% in home prices over the next year, reflecting the real estate listings site’s growing optimism about the US housing market.
According to Zillow’s Home Value Index, the company’s economists predict that home prices will rise by 5.8% by the end of 2023, reaching a 6.5% increase by July 2024. This implies that the median home price in the US will increase to $370,754 by July of next year, up from the current median price of $348,125.
Contrary to other firms’ predictions, which anticipate a decline in home prices by year-end, Zillow’s forecast attributes the rise in prices to the shortage in housing inventory. According to Zillow’s research team, the available supply of homes on the market has been reduced by 50% since July 2019.
Zillow researchers emphasized that limited inventory and persistently elevated mortgage rates will continue to push home prices upward and restrict sales volume in the coming months.
Furthermore, housing affordability has been strained due to high mortgage rates that have remained close to a 20-year record. Despite typically dampening demand, these rates have also discouraged homeowners from listing their properties for sale in order to hold onto their low-rate mortgages.
Experts argue that the housing market will remain unbalanced until mortgage rates significantly decrease. They estimate that rates would need to fall to the 5% range to unlock more inventory.
With the current affordability crisis showing no signs of relief, Zillow is now offering prospective homebuyers the option to make a 1% down payment on newly purchased homes.