U.S. Housing Market: Things that Rise Also Fall

Shana Ahmed Tani Fukui Thomas Smith
NOV 01, 2022

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Key Takeaways

  • We anticipate the year-over-year growth of national home prices to slow to a positive single-digit rate at year-end 2022 and to turn negative in 1H23. We may see a negative single-digit change in home prices at year-end 2023.
  • We anticipate the U.S. housing market to resume modest, positive price growth in two to three years.
  • We expect continued rate hikes, already a major headwind, to further decelerate housing price growth in the near term. The stronger and/or longer the tightening cycle, the more negative we believe the impact on housing prices.
  • We believe the chance of the rerun of the 2008 crisis is low, due to healthier household balance sheets, better credit quality of mortgage loans, less likely strategic defaults, lower loan-to-value ratios, more robust equity positions, and an underbuilt housing market.