Morgan Stanley's head of housing market research, Jim Egan, noted, 'We believe the housing market, and home prices in particular, are on a healthy foundation... just the dynamic introduced by increasing inventories, allowing home price appreciation to dip below 0%.'
Egan explained the bearish outlook, stating, 'It is this inventory growth that we believe has contributed to the slowdown in home price appreciation over the past several months... bringing it below 0% by the end of the year, leading to our -2% forecast.'
Morgan Stanley's forecast explains, 'Our home price appreciation forecast is based on an analysis of several factors... the U.S. housing market's intertwined affordability and supply dynamics.'
Egan also mentioned that 'affordability has improved from Q4 2023, even when the recent increase in mortgage rates since mid-September is factored in.'
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