Zillow has recently revised down its home price forecast, predicting that prices in the country should rise 14.9% between March 2022 and March 2023. That is down 2.9% from the previous month, when Zillow said year-over-year prices could go up 17.8% by February 2023.
“Driving the downwardly revised forecast are affordability headwinds that have strengthened faster than expected, largely due to sharp increases in mortgage rates,” wrote the Zillow researchers. “Further risks to the outlook as well: Inventory levels remain near record lows, but have the potential to recover faster than anticipated, which could lower future price and sales volume projections.”
While Zillow dialed down its forecast, its outlook still projects a robust growth and competitive market in the coming year. Other forecasts have not been quite as bullish. The CoreLogic HPI Forecast indicates that home prices will increase on a month-over-month basis by 5% on year-over-year basis from February 2022 to February 2023. The Mortgage Bankers Association forecasts purchase originations to rise 4.6% to $1.72 trillion this year, followed by gains of 3% in 2023 and 4% in 2024.
Although forecast models are not in agreement over home price growth in the coming year, most research firms and economists appear to coalesce around the impact of rising interest rates over consumer demand, which could help lower future prices and sales volume.
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