How Will Home Prices Fare in the Next 12 Months?
A question on many builders’ minds right now is where home prices will go in the next 12 months, especially with the volatility of the market due to the coronavirus. Though specific markets’ forecasts vary by location, many realtors are leaning towards prices dropping, but not dramatically. Only 3 percent of them expect prices to fall more than 20 percent, while 23 percent believe prices will remain stable, 38 percent expect an increase, and 40 percent think prices will fall, according to NAR’s March 2020 Realtors Confidence Index Survey of 2,063 realtors. With the way 2020 has gone so far, however, the only way to know is to wait and see.
Realtors have mixed expectations about the direction of home prices in their markets in the next 12 months, according to NAR’s March 2020 Realtors® Confidence Index (RCI) Survey, a monthly survey of Realtors® about the characteristics of their transactions in the reference period (March 2020) and their outlook in the next 12 months.
The survey asks respondents “In the neighborhood(s) or area(s) where you make the most sales, what are your expectations for residential property prices over the next year?” Among the 4,063 respondents, 23% expect prices to remain stable, 38% expect prices to increase, and 40% expect prices to fall. The median expected price change is -0.5%.
Only 3% expect prices to fall more than 20%, so Realtors® are not expecting prices to collapse as they did during the Great Recession when prices fell by 25% during 2006 to 2011.