BENGALURU, May 31 (Reuters) – U.S. home prices will decline less than previously expected this year before stagnating in 2024, despite widespread expectations interest rates will remain higher for longer, according to property analysts polled by Reuters.
Even though the U.S. Federal Reserve has embarked on its most aggressive tightening cycle in four decades, average home prices have fallen just over 5% from their recent peaks, barely a dent compared to the 45% rise during the COVID-19 pandemic.
That resilience in one of the most interest-rate sensitive sectors of the economy is largely down to the stubbornly-tight supply of homes, which was not expected to ease for at least the next six months.
Home prices, which resumed their rise in March after eight months of declines, will fall 2.8% this calendar year on average, a May 15-30 poll of 30 property analysts showed. That is less than the 4.5% drop predicted in March.
Average house prices as measured by the S&P CoreLogic Case-Shiller composite index of 20 metropolitan areas were forecast to stagnate next year.
The predicted 9% peak to trough fall is less than one-third of the slump during the 2007-2008 global financial crisis, leaving prices well out of reach for aspiring homeowners.
“Looking ahead, we think there is scope for prices to fall a little further. Affordability is still stretched and a weakening economy will weigh on homebuyer sentiment,” said Sam Hall, property economist at consultancy Capital Economics.
“Given supply is likely to stay tight, there is a risk house prices may not fall as much as we previously expected.”
Source: www.reuters.com
