Housing market prediction: Zillow forecasts U.S. home prices will rise. What will happen in Utah, Idaho?
U.S. home prices will rise 6.5% from July 2023 to July 2024, economists say
Though the spectrum of housing market predictions run the gamut, one big name is more bullish than the others.
In their latest forecast, Zillow housing economists have revised their estimates to be even more optimistic heading into 2024, predicting U.S. home prices will rise 6.5% from July 2023 to July 2024. That’s up from their 6.3% prediction last month.
Even though high mortgage interest rates continue to sideline many would-be home shoppers and lock sellers in place, it’s the sheer lack of homes that will send prices higher into next year, Zillow economists predicted, writing, “tight inventory conditions continue to place upward pressure on home prices, despite persistent affordability challenges.”
Along with rising home prices, Zillow is also predicting home availability to only worsen. The real estate site’s economists forecast 4.2 million existing home sales in 2023, a 17% decline from 2022.
“Just over half as many homes were listed for sale in July compared to the same month in 2019, and 29% fewer new listings entered the market in July than what was typical this time of year prior to the pandemic,” Zillow economists wrote. “This shortage has buoyed competition for the homes that are for sale. Homes that went under contract (or “pending”) in July did so in 12 days — a week and a half faster than what was typical in 2018 and 2019.”
They’re also predicting “persistence of elevated mortgage rates,” along with tight inventory, will continue to dampen sales for months to come.
Along with Zillow, firms like CoreLogic and AEI Housing Center believe home prices have bottomed, Fortune reported. However, firms including Moody’s Analytics and Morgan Stanley have a more bearish outlook, predicting home prices could dip again sometime between now and the end of 2024.
Where will home prices rise the most?
Zillow’s forecast model predicts 120 of the nation’s 400 largest housing markets will see even bigger increases than 6.5% — some 7% or greater over the next year, Fortune reported. Those 120 markets are scattered across the country.
Utah and Idaho are among states with markets that could see such gains, according to a Fortune analysis of Zillow data, based on prices measured by the Zillow Home Value Index.
Here’s a breakdown of those regional home price forecasts, according to Fortune’s analysis of Zillow’s forecast:
- Salt Lake City — up 6.4% between July 2023 and July 2024
- Ogden-Clearfield — up 7.4%
- Provo-Orem — up 5.8%
- Logan — up 7.7%
- Boise City — up 6.4%
- Twin Falls — up 8.8%
- Pocatello — up 9%
- Idaho Falls — up 7.6%
These forecasts come as areas in the West including Utah and Idaho have seen some of the most dramatic home price corrections amid rising mortgage interest rates.
The West’s housing markets boiled over during the pandemic housing frenzy when low interest rates and new remote work opportunities sent homebuyers looking for bigger homes at lower price points. But now, after mortgage rates shot up amid the Federal Reserve’s efforts to tamp down inflation, the West was the first to see home prices dip and continues to see negative gains while eastern markets have slowly ticked up.
But since home prices in Utah appeared to bottom this winter, they’ve been slowly rising again. Homes continue to sell despite affordability levels at their lowest point since before the 2006 housing bubble popped, but housing experts continue to attribute national and local housing shortages as the main reason home prices are continuing to rise.