Prior to that conversation, the Zillow Home Value Index, which tracks U.S. home values, not only started to rise once more but also reached a new record high. This increase was driven by the tailwind created by low inventory levels, which was strong enough to outweigh the headwind brought on by the shock of mortgage rates.
Zillow’s consistent upward revisions to its home price projection occurred at the same time as the U.S. housing market resurgence. In its most recent forecast, Zillow increased its earlier 6.3% prediction to a 6.5% increase in U.S. home values between July 2023 and July 2024. For context, Case-Shiller’s tracking of U.S. home prices since 1975 has shown an average yearly growth of 5.5%.
Even while mortgage rates are still high, there is a shortage of homes for sale, according to housing analysts at Zillow. In July, there were 29% fewer new listings on the market than what was customary for this time of year before the pandemic, and just over half as many properties were posted for sale compared to the same month in 2019. The rivalry for available properties has increased as a result of the shortage. A week and a half quicker than what was average in 2018 and 2019, homes went under contract (or “pending”) in July.
While Zillow economists anticipate a 6.5% gain in national home prices over the next year, their projection model anticipates increases of at least 7.0% in 120 of the 400 major housing areas in the country.
These 120 housing markets are spread out across the nation, so there isn’t just one thing that ties them together. The West (including Santa Maria, Calif.), South (Tampa), Midwest (Indianapolis), and Northeast (Scranton, Pa.) are all home to them.
While experts at CoreLogic and the AEI Housing Centre share Zillow’s view that U.S. home prices have peaked, not all companies concur. According to companies like Moody’s Analytics and Morgan Stanley, the decline in U.S. home prices will take place between now and the end of 2024.