U.S. housing market: prices to peak in 2023 - forecast by 27 research firms

The U.S. housing market is no exception. The string of 124 consecutive months of positive house price growth that began at the bottom of the previous recession in February 2012 and ended during the pandemic housing boom in June 2022 has been replaced by a new string: four consecutive months of falling U.S. house prices. From June through October 2022, U.S. home prices, as measured by the Case-Shiller National Home Price Index, fell 2.4%. On the one hand, this is already a large enough correction to be considered the second largest housing price correction since World War II. On the other hand, it's a moderate drop from the 26% correction that occurred between 2007 and 2012.

Even in May 2022, Fortune magazine reported''readers about "something big" happening in the US housing market as rising mortgage interest rates are about to lead to a sharp decline in housing market activity. Again, we can say that something big is happening to describe a US housing market that has clearly moved into deflationary mode. The open question is, how much of the historic increase in home prices during the pandemic boom of 41% and dropping to 38% by October 2022 will be erased? To better understand what's in store for the housing market in 2023, Fortune contacted 27 of the nation's top housing market researchers. Of this group, four expect U.S. home prices to rise in 2023, while 23 others believe U.S. home prices will continue to fall. Below we''present these 27 home price forecasts - they are ordered from most optimistic to most pessimistic.

Realtor.com:

The Realtor.com economic team predicts that the median price of existing homes will increase by 5.4 percent in 2023 and that mortgage rates will average 7.4 percent. "The slowdown in housing transactions that began with an increase in mortgage interest rates in 2022 is expected to continue, resulting in slower home price growth and a rebalancing of the housing market in favor of buyers," Realtor.com researchers wrote.

Home.LLC:

The company predicts U.S. home prices will rise 4 percent in 2023.

CoreLogic:

The real estate market analysis firm predicts U.S. home prices will increase 2.8% from November 2022''through November 2023. (Here is CoreLogic's latest risk assessment for the nation's 392 largest regional housing markets.)

NAR:

The trade association predicts that existing home prices will increase 1.2 percent in 2023 and mortgage rates will average 6.3 percent.

Freddie Mac:

The company's forecasting model predicts a 0.2% decline in U.S. home prices in 2023, with the mortgage rate averaging 6.4%. "We expect a moderate decline in home prices, but risks are at elevated levels," Freddie Mac economists wrote.

Mortgage Bankers Association:

The company's latest forecast calls for U.S. home prices, as measured by the FHFA US Home Price Index, to decline 0.6 percent in 2023 and 1.2 percent in 2024. The group also forecasts''s average mortgage rate of 5.2 percent in 2023 and 4.4 percent in 2024. "Inventory of new homes is increasing while demand remains quite weak, and more builders are offering price discounts and other incentives to sell properties," researchers at the Mortgage Bankers Association wrote.

Zillow:

Economists at a home selling website predict that U.S. home values will decline 1.1 percent from November 2022 to November 2023.

Fannie Mae:

The company's economists forecast that U.S. home prices, as measured by the Fannie Mae Home Price Index, will decline 1.5 percent in 2023 and 1.4 percent in 2024.

Redfin:

The company's baseline forecast''big time. High rates are a hurdle, but rising earnings are a huge support,' Son Dobson, CEO of Amherst Group, tells Fortune.

Wells Fargo:

The bank's forecast model assumes a 5.5 percent decline in U.S. home prices in 2023. "Markets where home prices have risen the most are now vulnerable to proportional declines, especially in previously hot markets in the mountains that attracted large numbers of remote workers at the start of the pandemic. Home prices in desirable locations with relatively limited supply are likely to hold up much better," Wells Fargo researchers wrote.

Capital Economics:

The company's forecast model predicts U.S. home prices will decline 8% from their peak to''lows.

Goldman Sachs:

The investment bank expects U.S. home prices to decline between 5% and 10% from top to bottom, with its official forecast model predicting a 7.6% decline. "There are risks that housing markets could decline more than the model suggests," Goldman Sachs researchers wrote.

ING:

The Dutch bank predicts U.S. home prices will fall between 5% and 10% from top to bottom. However, the international lender says U.S. home prices could fall as much as 20%. "The decline in the housing market caused by rapidly rising mortgage costs continues to be a major concern for us. Home prices have risen significantly over the past few years as demand has far exceeded the limited''housing supply, but that process is now turning sharply upside down with mortgage applications for home purchases falling 50% from their peak in Q3 2020. At the same time, more supply is coming onto the market and we see the risk of a sharp price correction,' writes James Knightley, chief international economist at ING.

Bill McBride:

McBride, a housing market analyst and author of the Calculated Risk blog, expects U.S. home prices to decline by about 10 percent from their 2022 peak. "Since national home prices rose sharply during the pandemic - by more than 40% - it seems likely that some of the usual patterns will not play out. I think the most likely scenario now is a nominal decline in home prices of 10% or more from the peak and a real decline in prices of''housing by 25 percent or so over the next five to seven years,' McBride writes.

Keller Williams Realty:

Ruben Gonzalez, chief economist at Keller Williams Realty, expects the median home price tracked by NAR to drop 10 percent from top to bottom. "I believe we'll see a low in the first half of [2023]. Probably in March or April, but it depends on the trajectory of interest rates, which have been pretty volatile lately," Gonzalez tells Fortune magazine.

TD Bank:

The bank predicts U.S. home prices will decline about 10% from top to bottom. That includes a 5.7% decline in 2023 and another 2% decline in 2024. "We expect home price growth to soon find a more sustainable footing after the start of 2024," says Admir Kolai, an economist at TD Bank,''to Fortune magazine.

Morgan Stanley:

The investment bank expects home prices to fall about 10 percent from June 2022 to a low in 2024. If mortgage interest rates fall more than expected, Morgan Stanley researchers say the price drop from top to bottom will be about 5%. However, if a "deep" recession manifests itself, Morgan Stanley predicts U.S. home prices could fall 20% from peak to bottom, including an 8% decline in home prices in 2023. "The fact that we expect home prices to start declining on an annualized basis in March 2023