US home prices are plunging at their most significant clip since the housing market cratered during the Great Recession, mortgage analytics firm Black Knight said in a report released in August.
According to Black Knight’s August Mortgage Monitor report, median home prices fell by 0.98% from July to August. Revised data showed an even sharper 1.05% decline from June to July.
“Together, they represent two straight months of significant pullbacks after more than two years of record-breaking growth,” said Black Knight Data & Analytics President Ben Graboske.
“The only months with materially higher single-month price declines than we’ve seen in July and August were in the winter of 2008, following the Lehman Brothers bankruptcy and subsequent financial crisis,” Graboske added.
The Pending Home Sales Index (PHSI) sank 4.6% to 77.1 in October, according to the National Association of Realtors.
Year-over-year, pending transactions slipped by 37.0%. An index of 100 is equal to the level of contract activity in 2001.
“October was a difficult month for home buyers as they faced 20-year-high mortgage rates,” said NAR chief economist Lawrence Yun. “The West region, in particular, suffered from the combination of high interest rates and expensive home prices. Only the Midwest squeaked out a gain.”
Pending US home sales drops 37% YoY…
the largest decline on record… 🔥🔥🔥 pic.twitter.com/vT5vRVfjq1
— Wall Street Silver (@WallStreetSilv) December 2, 2022
Insider spoke to some experts about their predictions for 2023, and we’ve added a few of them below:
Global investment firm Goldman Sachs downgraded its forecast for US home prices in a note from October and now projects them to fall between 5% to 10% from the peak prices seen earlier this year.
Lawrence Yun, chief economist at the National Association of Realtors
Lawrence Yun of the National Association of Realtors anticipates widespread home price declines in 2023 but does not believe they will be severe. He shares a sentiment with colleague Nadia Evangelu, senior economist with the NAR.
Ivy Zelman, CEO of Zelman & Associates
As long as mortgage rates remain elevated, Ivy Zelman, who has long had a more sober perspective on the housing market, believes that demand will continue to shrink in the US housing market, resulting in steeper price cuts. For 2023, Zelman predicts that prices could fall as much as 20%.
Orphe Divounguy, senior economist at Zillow
Data from real estate brokerage Zillow shows that housing demand in the US has likely fallen by more than 30% in the past year. Zillow’s Orphe Divounguy says the shift is likely to pull prices down even lower next year — especially in markets like Phoenix and Denver where builders and developers have introduced an abundance of inventory.
However, he says buyers won’t see dramatic price cuts in 2023.
Jose Torres, senior economist at Interactive Brokers
Jose Torres of Interactive Brokers has a bleak outlook for the US real estate market. With inventory levels at all-time lows, he believes supply and demand dynamics will give way to significant price declines nationwide.
On a July call, Torres told Insider he believes that US home prices could drop by as much as 25% by the second half of 2023. His bearish outlook is attributed to the nation’s housing affordability crisis which he says has created a housing ecosystem where there are “no buyers in sight.”
“In a similar fashion to the months leading up to the 2008 real estate market debacle, the percentage of average monthly payments to household income and personal income have been at record high levels throughout this year, which is creating demand for rental units among Americans who can’t afford homes,” Torres said.
The old Marxist, Janet Yellen, continues to lie.
Don’t blame the Biden Admin printing trillions of dollars: @SecYellen tells @StephenAtHome the real reason inflation is out of control is because Americans are “splurging” on goods; “and, remember, Russia has conducted a brutal war against Ukraine” pic.twitter.com/d0xbhA7sbH
— Tom Elliott (@tomselliott) December 1, 2022