Home Values to Rise 6.5% Over Next Year, Zillow Report Says
Home values have bottomed out, says Zillow, and home sales will decrease amid a tight market.
Just when U.S. home values seem impossibly unaffordable, Zillow revised its forecast to reflect even higher prices to come. The company predicted that its national Zillow Home Value Index (ZHVI) will jump 6.5% from July 2023 through July 2024.
Home values surge in a tight market
Zillow credits several factors for driving home price growth over the next year. First, rising mortgage rates increase monthly payments for would-be homeowners in a market that has adapted to low mortgage rates. The average 30-year fixed rate mortgage reached 7.23% last week, the highest rate since the year 2000, according to data from Freddie Mac. The Federal Reserve Board meets again on September 20, and mortgage rates could hold steady or decline slightly if the Fed decides against another rate hike. Fed Chairman Jerome Powell, however, has indicated that he is prepared to raise rates if needed. The central bank raised the fed funds rate, a key overnight bank lending rate, by a quarter-percentage point, to a range of 5.25% to 5.50% as of the last Fed meeting in July.
It’s no secret that tight inventory is also driving up home values. Zillow forecasts that 2023 home sales will hit 4.2 million, representing a 17% decline from 2022. And when compared to pre-pandemic inventory, the picture looks even more discouraging for home buyers. This lack of available housing translates into faster sales; homes for sale in July 2023 went under contract in only 12 days, compared to about 22 days in 2019.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Forecasts can be wrong, of course. In fact, Kiplinger’s economic forecasting team is more bearish than Zillow, predicting that high mortgage rates will drive housing price declines over the next few months.
Read More
To continue reading this article
please register for free
This is different from signing in to your print subscription
Why am I seeing this? Find out more here
Ellen writes and edits personal finance stories, especially on credit cards and related products. She also covers the nexus between sustainability and personal finance. She was a manager and sustainability analyst at Calvert Investments for 15 years, focusing on climate change and consumer staples. She served on the sustainability councils of several Fortune 500 companies and led corporate engagements. Before joining Calvert, Ellen was a program officer for Winrock International, managing loans to alternative energy projects in Latin America. She earned a master’s from the U.C. Berkeley in international relations and Latin America.
-
Earn Delta SkyMiles Worth Up to $1,800 with an AMEX Business Card
Delta SkyMiles and American Express offer 150,000 on business credit card for new cardholders.
By Ellen Kennedy Published
-
Stock Market Today: Markets Soar Amid Strong Earnings for Big Tech
Equities ended the week on an up note thanks to some of the market's biggest names.
By Dan Burrows Published
-
How Retirees Can Downsize In Today's Housing Market
Rising prices, higher interest rates and a tight supply of smaller homes present challenges. But retirees have an edge.
By Sandra Block Published
-
Five Housing Markets On the Rise
Study shows homes in five markets are going under contract in less than two weeks, despite a broader national housing market slowdown. Which cities are bucking the trend and why?
By Seychelle Thomas Published
-
House Hacking: Make Money Off Your Home
House hacking involves renting out a part of your residence to create passive income. Here's how it works.
By Jacob Wolinsky Published
-
Steep Mortgage Rates Stunt Home Buying Power
The high-rate environment of today’s housing market leaves potential homebuyers with less purchasing power than last year, study shows.
By Seychelle Thomas Published
-
Monthly Housing Payments Hit All-Time High, Study Shows
Monthly housing payments hit an all-time high in September, a report from Redfin shows, reflecting the multi-decade high for mortgage rates and continued rise in home prices.
By Seychelle Thomas Published
-
When Renting Is Smarter Than Buying
real estate There are some situations when renting is smarter than buying. You're not necessarily throwing your money away when you rent.
By Miriam Cross Published
-
Find the Best 30-Year Mortgage Rates
30-year mortgage rates — check out the best here.
By Erin Bendig Last updated
-
Best Time of Year to Buy A House
You may find a good home deal at any time of year, but certain seasons or even months have the perfect blend of inventory, supply and price. Here's when to look.
By Donna LeValley Last updated