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.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free 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
-
Dow Dives 797 Points as Government Opens: Stock Market TodayThe process of pricing and re-pricing realities old and new never stops, and next week promises to be at least as exciting as this week.
-
3 Ways High-Income Earners Can Maximize Their Charitable Donations in 2025Tax Deductions New charitable giving tax rules will soon lower your deduction for donations to charity — here’s what you should do now.
-
A New Kind of HELOC Lets Homeowners Fund Remodels on Their TermsFinance home upgrades gradually, using the equity you already have.
-
Selling a Haunted House? What You Have to Tell Buyers (and What You Don’t)You don’t need ghosts to spook buyers, sometimes a home’s past is enough. Here’s what sellers should know about disclosure laws, pricing and perception when a property has a haunted history.
-
A Vacation Home Sounds Dreamy, But Is It the Right Move for You?A vacation home can be a relaxing getaway or a financial burden. Learn the pros and cons of owning a second home and how to decide if it fits your goals.
-
Planning a Major Home Renovation? 3 Smart Ways to Finance ItFrom HELOCs to personal loans, here’s how to pay for a major home renovation without draining your savings.
-
I Made Some Mistakes Buying My First Home. Here's How I'm Making Sure It Doesn't Happen AgainHome Buying Buying a home can be a complicated process. I'll show you some common mistakes we encountered and provide expert tips to help you avoid these.
-
How Location Changes the Math on Owning a Vacation HomeThe market you choose can make your dream getaway a smart investment — or an expensive mistake.
-
Home Equity in Retirement: Should You Sell, Borrow or Rent?Learn how to preserve your property's value, tap equity for income and make smart choices about downsizing, renting or leaving a legacy.
-
Falling Interest Rates: What They Mean for Homeowners, Savers and InvestorsAs interest rates fall, homeowners may celebrate while savers feel the pinch. Here’s what the change could mean for your money.
