Zillow’s 2024 Home Price Forecast predicts a robust growth in the U.S. housing market, with a projected increase of 6.5% in home prices from July 2023 to July 2024. This positive outlook follows a statement made by Zillow’s housing economists in February, where they asserted that U.S. home prices had reached their nadir and would experience a modest 0.5% rise over the ensuing year.
According to Fortune.com, the Zillow Home Value Index showed that home prices not only started to ascend again in the months following this prediction but also hit a record high. This rise was fueled by a shortage of available properties, which outweighed the negative impact of increased mortgage rates. Consequently, Zillow has continuously adjusted its home price forecast upwards, with the most recent revision being a 6.5% increase, a slight uptick from the 6.3% projection made the previous month. To put this into context, the Case-Shiller index indicates that, since 1975, the average annual increase in U.S. home prices has been 5.5%.
Zillow’s housing economists noted, “The scarcity of properties available for sale continues to drive up home prices, despite the persistence of high mortgage rates. The number of homes listed for sale in July was just over half of what it was in the same month in 2019, and there were 29% fewer new listings in July compared to the average for this time of year before the pandemic. This shortage has intensified competition for available properties. In July, homes that went under contract (or ‘pending’) did so in 12 days – 1.5 weeks quicker than the norm in 2018 and 2019.”
While the overall prediction is for a 6.5% increase in national home prices over the next year, Zillow’s forecast model anticipates that 120 of the 400 largest housing markets in the nation will experience price increases of 7.0% or more during the same period. Interestingly, these 120 markets are geographically diverse, spanning the West (e.g., Santa Maria, California), South (e.g., Tampa), Midwest (e.g., Indianapolis), and Northeast (e.g., Scranton, Pennsylvania).
However, there is no consensus among experts regarding the trajectory of U.S. home prices. While Zillow, CoreLogic, and the AEI Housing Center believe that prices have bottomed out, other firms, including Moody’s Analytics and Morgan Stanley, anticipate a slight decline in home prices between now and the end of 2024.