The New York Federal Reserve's annual SCE Housing Survey revealed that most Americans expect mortgage rates to soar from 6.4% to 8.4% in 2023, reaching their highest level in nearly a quarter of a century. A dire outlook for mortgage rates comes amid the Federal Reserve’s steadfast efforts to tame inflation both in the housing market and in the overall economy.
As interest rates move higher, the majority of U.S. households predict house prices will rise just 2.6% over the next year, well below the 7% rally expected in the February 2022 survey, Insider reports.
Yale economist Robert Shiller, whose analysis with Karl Case formed the basis for the Case-Shiller Index, said Monday he expects houses to become cheaper over the next six months due to an expected slowdown in US economic growth.
"It's easy to forecast the short-run in the housing market, if you're a long-term buyer it's not clear," he told CNBC's "Closing Bell: Overtime". "Home prices are very, very high by historical standards."
"I would extrapolate the downturn somewhat — it's going to continue," Shiller added. "Maybe if you have a good chance to delay your purchase, it might be a good time to do it."
Market Data + Trends
High Home Prices and Rents Cause Investor Pullback, Giving Homebuyers a Chance
As professional investor activity in the residential housing market slows, homebuyers may enjoy less competition for available homes
Buyers Retreat as Mortgage Rates Creep Over 7% Threshold Again
Mortgage rates rose above 7% again this week, and experts say purchase applications are likely to slow as a result
Mortgage Rates Remain High, but Rate Stability Is Encouraging Buyers
The 30-year, fixed-rate mortgage has been hovering under 6.5% APR for the last few weeks, and homebuyers are using that stability as an opportunity to buy