house prices are Plunge in late 2022 Demand for residential real estate has cooled in many states and cities across the country. According to a prominent Wall Street economist, prices could continue to fall by up to 20% next year as mortgage rates rise and the housing market normalizes in the wake of the pandemic.
Ian Shepardson, chief economist at Pantheon Macroeconomics, said in a report this week that demand for housing has fallen. Mortgage interest rates soaring It weighs heavily on housing prices.
“[W]Home sales are expected to continue to decline through early next year. By that point, sales will have shrunk to an incompressible minimum where only those who have no choice but to go home due to work or family circumstances,” he said. [basis point] Prices have increased over the past year. ”
home sales 4.7 million Last month was down 1.5% from August, according to the National Association of Realtors.
Rising interest rates could further tighten supply
Mortgage interest rates have more than doubled this year. The average interest rate on a typical 30-year mortgage rose to 6.94% this week from 6.92% last week and he 3.2% in January. The average interest rate for a 15-year fixed-rate mortgage is now 6.23%, compared to 2.33% a year ago.
Rising interest rates have forced some homeowners to put the brakes on selling their properties.
“Even for those who want to trade-in, there’s a good chance their monthly payment will increase,” Shepardson said. “This is a valid reason for maintaining the status quo, which curbs supply,” he said.
Shepherdson predicted that the supply of available homes for sale is likely to shrink next year, noting that “price will need to drop significantly to restore equilibrium.”
The median home sale price rose to $384,800 in September, up 8.4% from a year ago, according to the NAR. Said.
Nancy Vanden Houten, chief U.S. economist at Oxford Economics, said: “We expect inventories to rise slightly over the next month or two as homes stay in the market longer, but sellers recede to the sidelines. Therefore, the new list continues to decline,” said a research note.
How high will interest rates go?
Economists expect mortgage rates to continue rising next year as the Federal Reserve further raises borrowing costs to keep inflation in check. NAR chief economist Lawrence Yun told a group of real estate investors last week that interest rates could reach 8.5%. Other analysts believe mortgage rates could hit double digits.
Mortgage rates have risen nearly 3.8% since the end of 2021, according to Oxford Economics. Wall Street analysts expect the Fed hike to raise the benchmark rate by another 1.5% by the end of the year.
“At the beginning of the year, it seemed very unlikely that mortgage rates would exceed 6%,” said Lisa Sturtevant, chief economist at BrightMLS. Said real estate magazine. “The question is how high will rates go? A lot of the answer will depend on how aggressively the Federal Reserve will raise rates at its next two meetings,” he said.
https://www.cbsnews.com/news/home-prices-for-2023-mortgage-rates/ US house prices could fall as much as 20% next year