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
-
A Guide to Music Streaming ServicesDeals Our guide to music streaming services from Spotify to Amazon Music, Tidal to Apple Music and how to find music streaming deals.
-
Stock Market Today: Markets Reflect Global UncertaintyExuberance fades as investors confront micro challenges and a murkier macro environment.
-
First-time Homebuyers Are Older Than Ever, Survey RevealsFirst-time homebuyers are now in their late 30s and jostle with cash-rich buyers in the race to buy a home, new research from the National Association of Realtors has found.
-
Should You Refinance Your Mortgage Now That the Fed Just Cut Rates?The Fed just cut rates, so mortgage refinance rates will be cheaper. Should you act now, or wait?
-
Mortgage Rates Are Falling: 10 Housing Markets That Could Benefit the MostThese are the top 10 metro areas where the most mortgages are unlocked by lower rates. Plus, the magic number for mortgage rates.
-
With Mortgage Rates Dipping, Is Now a Good Time to Buy a House?Pricing pressure, interest rates, and rising unemployment numbers have sidelined homebuyers. But now that the Fed has cut rates, is it a good time to think about getting back into the market?
-
How Much It Costs to Refinance a Mortgage and Other Questions to ConsiderRefinancing a mortgage works by replacing your current mortgage with a new one. It can save you money or let you tap the equity in your home, but it can take time to break even after upfront costs.
-
How Retirees Can Downsize In Today's Housing MarketRising prices, higher interest rates and a tight supply of smaller homes present challenges. But retirees have an edge.
-
How to Find Foreclosed Homes: Best Foreclosure Listings SitesMaking Your Money Last Find foreclosed homes for sale on these foreclosure listing websites. Search for properties on these free, paid or government sites.
-
Five Housing Markets On the RiseStudy 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?
