Home prices will fall 1.2% this year, according to a new analysis
Time to Read: 1 minute
Analysts at Fannie Mae forecast that by 2024 the cost of homes will have declined 2.2%, despite the lack of inventory and the strong demand continue to drive prices.
Although high demand and low inventory have maintained the price of homes, senior economists from the Federal National Mortgage Association, better known as Fannie Mae, calculated that for this year the cost will decrease by 1.2%.
The real estate market continues surfing the possibilities of a fall in prices, however specialists predicted that the decline will be slower than expected, and they also anticipate that by 2024 it will have decreased by 2.2%.
This low-inventory, high-demand trend “did not improve during the spring homebuying season, when more homes are typically put on the market,” some analysts said, adding that “this has supported a return to home price growth in recent months and has continued to fuel new home construction”.
In February it was predicted that prices would fall this year by 4.2%. However, an analysis by the Mortgage Bankers Association (MBA) noted that due to a lack of inventory and many potential sellers not wanting to drop their mortgages at lower rates, sales of existing homes have fallen, so the market has had to push prices up.
Doug Duncan, Fannie Mae chief economist, said “house prices continue to show stronger-than-expected growth due to sudden and the significant magnitude of mortgage rate increases,” he said.
For the first time in almost two decades, mortgage rates exceeded the 7% increase and this is mainly due to the constant interest rate increases by the Federal Reserve to control inflation.
Performance housing is a testament to the strength of demographic-related demand as aging Baby Boomers and Generation-X lock in historically low rates, which have helped keep housing supply at historically low levels” Duncan pointed out.