The Federal Reserve’s ongoing inflation fight has many questioning if a housing crash is right around the corner as we see spiking mortgage rates push the U.S. housing market into a sharp slowdown. Analysts are adjusting their 2023 house price estimates as both the National Association of Home Builders and National Association of Realtors both recognize the severe decline as a “housing recession.” However, few research firms are ready to predict a total housing crash, something experts say would require a decline greater than 20%.
This week, Zillow released an updated forecast for the next 12 months, predicting that the U.S. home values will climb 1.4%, down from the 2.4% forecasted in August, and down from the 7.8% it forecasted in July. In July, Zillow economists predicted that only five regional housing markets would be affected by the falling home values over the coming year. In August, they adjusted that count to 123 regional markets, and this week, they adjusted that forecast again to 259 of the nation’s 896 housing markets that are likely to see declining home values in the coming year.
“Our view is that you will see—and we’re seeing it right now—home prices will fall even though supply levels are not ripping higher. And I think that’s an interesting thing that is now starting to surprise a lot of people,” Rick Palacios Jr., head of research at John Burns Real Estate Consulting, tells Fortune.
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