AFP
Zillow has revised down its home price forecasts for this year and the next 12 months due to the ongoing increase in mortgage rates.
The real-estate website, which is the most-visited in the U.S., said in a statement Wednesday that the typical home value is expected to rise by 3.3% in 2023. This is a decrease from the previous estimate of 4.3% made last month.
The forecast for the 12 months leading up to September 2024 indicates a sales increase of 2.1%, which is less than half of the earlier projection of 4.9% for the period ending in August of the following year.
Zillow attributes these adjustments to the ongoing shortage of homes for sale, which is exerting upward pressure on prices. Many homeowners, who have locked in low mortgage rates, are reluctant to enter the market as sellers, thereby reducing the number of available properties.
According to Freddie Mac’s statement Thursday, the average 30-year fixed rate reached 7.57% in the week ending Oct. 12, marking the fifth consecutive increase and the highest level since December 2000. In contrast, the rate stood at 6.92% a year ago.
Zillow has maintained its estimate for existing home sales this year at 4.1 million, reflecting an 18% drop from 2022. In August, pending home sales decreased by 7.1%, as reported by the National Association of Realtors on Sept. 28.
Mortgage rates are directly influenced by Federal Reserve policy and reactions in the Treasury market. The U.S. central bank retained the rate within the range of 5.25% to 5.50% on Sept. 20, the highest level in 22 years. Some Fed officials have publicly advocated for an additional increase before the end of the year.
The next rate decision is scheduled for Nov. 1. Fed Chair Jerome Powell is set to speak about the outlook for the economy Thursday.
