Home Price Projections Pop–Despite Decades-High Mortgage Rates. Cause to Celebrate?

Results from the latest (Q3) edition of the Home Price Expectations Survey are now available. The survey was conducted by Pulsenomics July 31 – August 14th.

A notable takeaway: the significant shift among our panelists recently in their outlook for 2023 U.S. housing market performance. The quarter-to-quarter change in near-term home price expectations (+3.7 points) is the largest in the 14-year history of this survey:

  • The panel-wide mean expected home price change for 2023 back in Q1 was minus 2 percent, with two-thirds of experts then projecting a 2023 decline in prices nationwide; in Q2, the outlook improved to minus 0.4 percent, with just under one-half of experts projecting a decline.
  • In our latest survey, the mean projection for 2023 home prices jumped into positive territory (+3.3 percent). One year ago—even though mortgage rates were about 150 basis points lower than they are now–the average home price forecast for calendar year 2023 was less optimistic (+2.6 percent). Now, only 15 percent of our panel members expect negative home price returns for 2023 (reminder: projections are expressed in nominal terms).

Recent changes in both realized and expected home prices amidst elevated mortgage rates reflect the depth of our nation’s housing supply problem. Hold the champagne.

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