US home prices seen rebounding after an expected US$1 trillion plunge this year

US residential real estate may lose close to US$1 trillion in value this year, but that loss will be transient as home prices are expected to rebound, according to a new poll.

Respondents expect prices to fall 2 per cent nationally this year, which implies that the value of the US housing market will fall to US$46.9 trillion from US$47.9 trillion at the end of 2022, per results of the poll conducted by housing analytics firm Pulsenomics.

While they see a meagre gain of just 1.2 per cent in 2024, the recovery will pick up steam in the following three years, when prices are forecast to increase 4 per cent annually.

Aggregate home values peaked at close to US$48 trillion during the third quarter of 2022, according to data from the Federal Reserve. That was an increase from about US$33.4 trillion at the end of 2019.

The 107 survey respondents — which included economists, real estate professionals and professors — showed a high degree of uncertainty, with home price predictions for this year ranging from a 15 per cent fall to a 6.5 per cent rise. They were polled in the first two weeks of March.

“The dispersion of expectations among our survey panellists remains elevated: the five-year forecasts of the optimistic quartile of experts imply that aggregate US home values will grow to US$60.9 trillion by the end of 2027,” said Terry Loebs, founder of Pulsenomics.

SEE ALSO

US factory orders post second straight monthly decline in February

US job openings fall below 10 million for first time since 2021

DECODING ASIA

Navigate Asia in
a new global order

Get the insights delivered to your inbox.

Half of the forecasters say there is a downside risk to the price growth estimates while just 16 per cent said there could be an upside surprise. The remaining panellists see the risks as balanced.

Respondents expect every major US metro area to see declining or stagnant home prices from 2022, except in Miami. Metros in the South-east are projected to be the country’s strongest in 2023, while many in the West will be among the weakest.

In the most recent S&P CoreLogic Case-Shiller price gauge, Miami, Tampa and Atlanta reported the highest year-over-year gains among the 20 cities tracked in January. San Diego, Seattle and San Francisco saw the biggest declines. BLOOMBERG