At the peak of the housing boom, Zillow forecasted that home prices would rise another 17.8% over the coming year, but as the market cools, housing expectations are quickly changing. On Thursday, Zillow revised that forecast for the fifth time since March. Rather than forecasting 7.8% growth between June and July, Zillow now predicts that U.S. home values will rise by just 2.4%.
A 5.4 percentage point downward revision is equal to a $27,000 difference in anticipated home price appreciation for a $500,000 dollar home. Though nothing new, unpredictability in a rapidly adjusting market means that more record-breaking changes could be looming on the horizon, but this time, experts say that the market may be reaching equilibrium.
"While the recent decline in prices is a notable development, the housing market is still far from a return to normal conditions. The current slowdown is prompted by the collision of extreme price growth during the early- and mid-pandemic with the sudden increase in mortgage rates since December—a combination that swiftly weakened would-be homebuyers’ ability to afford or qualify to purchase their next house," writes Zillow chief economist Skylar Olsen.
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