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Despite strained housing affordability, national home prices, as measured by the Zillow Home Value Index, increased by 3.9% from May 2023 to May 2024 (see map below).

Over the short term, economists at Zillow and Moody’s expect national home price growth to decelerate.

Zillow’s latest forecast for U.S. home prices from May 2024 to May 2025 is -1.2%.

Moody’s latest forecast for U.S. home prices from May 2024 to May 2025 is +0.4%.

Click here to view an interactive version of the year-over-year home price change map below.

Zillow’s 12-month national home price forecast (-1.2%) predicts softer home prices than Moody’s (+0.4%), which is a bit surprising. Over the past two years, Zillow’s forecast model has consistently predicted more appreciation, while Moody’s has been relatively more bearish.

“The effects of ‘rate lock,’ owners holding on to their existing homes and low-rate mortgages, appear to be lessening over time, even as most outstanding mortgages have a rate well below what’s currently being quoted on the market,” wrote Zillow chief economist Skylar Olsen in a report this month.

Olsen added, “Home sellers are returning to the market but finding buyers hesitating. Fresh listings of houses rose significantly over last year, outpacing sales and cooling buyer competition and home price appreciation. Zillow forecasts further price relief on the horizon—further injections of inventory and mortgage rates expected to stay elevated through the year should temper competition.”

Click here to view an interactive version of Zillow’s 12-month home price forecast.

Similar to Zillow’s chief economist, the chief economist at Moody’s, Mark Zandi, believes an easing lock-in effect will soon soften home price growth.

“We expect homes for sale to steadily increase as more existing homeowners need to sell for demographic reasons—death, divorce, children, job change—and lower mortgage rates help ease their interest rate lock. The lower rates will also support housing demand, but the increase in housing supply will be even more significant, weighing on house price gains,” Zandi told ResiClub.

Click here to view an interactive version of Moody’s 12-month home price forecast.

While ResiClub doesn’t publish an official home price forecast, we believe that monitoring active inventory and months of supply can indicate which housing markets may be poised for price softening in the short term. ResiClub’s latest inventory analysis suggests that many Northeast and Midwest markets remain tight, while some pockets of the Gulf and Southwest are experiencing softening.

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