Home Mortgage What may happen to house prices over the next year

What may happen to house prices over the next year

by Joshua Garcia

A Shift in Housing Market Values May Be on the Horizon

For over a decade, housing values in the United States have remained remarkably consistent, steadily increasing year after year. However, economists are now starting to raise concerns about the future growth of the market.

According to CoreLogic, August marked 139 consecutive months of year-over-year increases in housing prices. The latest rise was 3.7% compared with the same month in 2022, and it is projected that home prices will continue to increase by an additional 3.4% annually through August 2024. These figures suggest a strong and stable housing market.

However, CoreLogic economists are now warning of a potential shift in the market. They believe that the slower buying season ahead, coupled with the surging cost of homeownership, may lead to a tapering off of monthly price gains. While home prices have been growing in line with typical seasonal averages, the future trajectory may be in jeopardy.

In August, despite the overall stability, housing values dipped into negative territory in eight states. Idaho, Montana, Nevada, Utah, Washington, Arizona, Texas, and New York all experienced a decline in housing prices. This suggests that the housing market is not immune to fluctuations and regional disparities.

One factor contributing to the high prices in the national market is the lack of inventory. Despite the strain on affordability caused by rising mortgage rates, there simply aren’t enough homes available for sale to meet the demand. This imbalance has helped to keep prices elevated, even as affordability becomes increasingly challenging.

Data from HouseCanary reveals a decline in new listing volume and properties going into contract, further reinforcing the notion of a subdued market. With a 20% decline in net new listing volume in September compared to the previous year, and a 12.4% decline in properties going into contract, the market appears to be favoring sellers rather than buyers. The median price for all single-family listings increased year-over-year, but decreased when compared with the previous month.

HouseCanary CEO Jeremy Sicklick suggests that the current seller’s market may prompt potential buyers to turn towards the rental market instead. He also points out that anticipated student loan payments beginning in October are expected to put additional downward pressure on demand from potential buyers who are already facing high purchase prices, high interest rates, and less discretionary income.

While the future of the housing market remains uncertain, there are certainly signs that a shift may be on the horizon. As the buying season slows down and affordability becomes more challenging, buyers and sellers should be prepared for potential changes in housing values in the coming months. It is important to stay informed and make informed decisions based on the evolving market conditions.

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