Home prices could spike nearly 5% in 2024: Zillow

Anticipating mortgage rates to remain elevated and new home listings to slightly rise in the coming months, some experts predict home prices would increase 4.9% from August 2023 through August 2024, according to the latest Zillow Home Value Index. 

However, this marks a downward revision from last month’s projection of a 6.5% increase from July 2023 to July 2024.

"August brought an unexpected late-summer uptick in the number of new for-sale listings entering the market," Zillow said in its data report. 

New listings increased by 4% from July to August, according to Zillow’s home value index. That signaled the first time that new listings increased over those two months, according to Zillow’s records. 

"To be clear, August’s new listings total – as well as total for-sale inventory – remains well below typical levels seen prior to the pandemic, and inventory conditions remain very tight," Zilow said. "This unusual late-summer supply uptick helped to ease market conditions some, causing our outlook for home values to cool."

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Home sales to keep trending downward: Zillow forecast 

Total home sales are expected to reach 4.1 million in 2023, marking an 18% decline from last year, according to Zillow’s forecast. And Zillow’s researchers expect sales volumes to remain sluggish amid tight inventory conditions and the resilience of high mortgage rates. 

Aditionally, the total number of available homes for sale dropped 16% as many home sellers remain reluctant to jump into the market and risk losing the low mortgage rates they secured before recent increases, according to the latest research by Redfin.

Still, some home sellers could see opportunity in the current housing market. 

"A few more home sellers have jumped off the sidelines," Redfin said in its report. "New listings have stabilized, ticking up slightly since the beginning of September. They’re down 7% from a year earlier, but that’s the smallest decline since July 2022.

"It’s possible that some homeowners are taking advantage of rising home prices and low inventory, counting on being one of the only homes for sale in their neighborhood," Redfin continued.

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Interest rates could increase soon 

Even though the Federal Reserve put the brakes on another interest rate hike in its September meeting, Fed leadership has said it won’t keep future rate hikes off the table until inflation is down to its preferred target. 

"Inflation remains well above our longer-run goal of 2%," Federal Reserve Chairman Jerome Powell said at a press conference. "We're prepared to raise rates further if appropriate, and we intend to hold policy at a restrictive level until we're confident that inflation is moving down sustainably toward our objectives."

Inflation increased to 3.7% in August, representing the most significant month-over-month hike since June 2022, according to the latest Consumer Price Index (CPI) released by the Bureau of Labor Statistics (BLS). That left the federal funds rate at a 22-year high of 5.25% to 5.5%

"While the Fed is holding steady for now, inflation remains stubborn, with increasing rent and housing leading the way in rising household costs," CoreLogic Chief Economist Selma Hepp said in a statement. 

And as the Fed looks on to meet its long-term goals, it could maintain a tight grip on monetary policy for the months to come. 

"With market expectations coalescing around the idea of ‘tighter for longer’ monetary policy, the Fed’s updated outlook offered telling clues," Realtor.com Chief Economist Danielle Hale said in a statement. "The 2023 year-end projection remains at 5.6%, meaning that another rate hike before year’s end is not only on the table, it is consistent with the median viewpoint."

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