Zillow's revised forecast indicates a projected 1.7% decrease in U.S. home prices over the next year, following multiple downgrades from earlier projections. Rising active listings are contributing to softer price growth, providing buyers with more options and leverage. Additionally, the affordability crisis has made potential buyers hesitate, opting to rent instead. Strain from rapid price increases during the pandemic, combined with rising mortgage rates, is also impacting market dynamics, particularly in the Sun Belt regions, which are predicted to experience significant declines.
"The rise in [active] listings is fueling softer price growth, as greater supply provides more options and more bargaining power for buyers," Zillow economists noted.
"Potential buyers are opting to remain renters for longer as affordability challenges suppress demand for home purchases," Zillow economists highlighted.
"Strained housing affordability-caused by U.S. home prices rising over 40% during the pandemic housing boom and mortgage rates spiking from 3% to 6% in 2022-is weighing on price growth."
"Weakening and softening housing markets across the Sun Belt will weigh on nationally aggregated home prices this year," Zillow projections indicate.
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