As the Federal Reserve continues its fight against fast-rising inflation, economists and housing experts polled in the latest Zillow Home Price Expectation (ZHPE) survey expect home prices to bottom out in 2023, Zillow reports. Home prices could fall 1.6% through December 2023 amid higher interest rates, but the panel foresees price growth picking back up at an average clip of 3.5% starting in 2024.
That slower price growth will help budget-conscious buyers catch up after years of record-setting gains, and that cooler demand will ultimately help to reset the market.
The panel also expects mortgage rates to trend downward after the first quarter. Asked when rates for 30-year fixed loans will be highest between now and 2025, nearly two thirds (63%) pointed to Q1 of 2023. A distant second was the second quarter of 2023 at 22%, and subsequent quarters earned 6% or less. Falling rates are far more helpful for affordability than falling home prices, at least at the scale of recent movements. The median respondent projected a 6% rate for 30-year fixed-rate mortgages at the end of 2023.
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