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- US home prices will fall 1.6% in 2023, then rise by an average yearly rate of 3.5% through 2027, a Zillow survey said.
- That's the same pace that was seen in the relatively stable period from 1987 to 1999.
- Under that scenario, home prices will be up 23% in 2027 from 2021 levels, according to Zillow.
While US home prices are expected to slide this year, the housing market will rebound and enter a steady cycle of growth, according to economists polled by Zillow.
In 2023, home prices will fall 1.6%, then rise at an average clip of 3.5% per year from 2024 through 2027, the Zillow Home Price Expectation survey showed.
That's the same pace that was seen in the relatively stable period from 1987 to 1999, "before the housing boom and bust cycle in the 2000s," Zillow said. Under that scenario, home prices will be up 23% in 2027 from 2021 levels.
"A return to more normal growth would be welcome after the rollercoaster ride that home prices have been on lately," Jeff Tucker, Zillow's senior economist, said in a press release.
But for now, high mortgage rates continue to push buyers away. The 30-year fixed mortgage has been heading back closer to 7% as the market prices in the odds of more hawkishness from the Federal Reserve to tackle sticky inflation.
Home prices have fallen for six straight months and are down 4.4% from their summer peak, according to the Case-Shiller Index.
But Zillow said the sheer number of people in the first-time homebuyer age range and tight housing inventory should limit price declines.
And mortgage rates will decline after the first quarter, most of the economists in the Zillow survey predicted, estimating a 6% rate to linger till the year's end.
Zillow's Thursday findings provide a more moderate outlook on a housing market that has some analysts worried of a crash. In late February, central bank economists outlined that the market was geared for a 19.5% correction, while a Goldman Sachs note forecast a 6.1% home price decline this year.