Report: Home Prices Not Likely To Decrease Over Next Two Years

What’s the chance that the average home price in the U.S. will decrease over the next two years?

About 5%, according to Arch Mortgage Insurance’s Summer 2016 Housing and Mortgage Market Review.

The report finds that the energy states are at the highest risk of home price decreases. Energy-extraction states, including Alaska, Wyoming, West Virginia and New Mexico, are seeing an exodus of residents, which, in turn, is freeing up more housing stock and holding down prices. These states remain at heightened risk and may experience slower-than-normal economic and home price growth over the next two years, according to the report.

“Apart from some weakness in some energy-extraction states, home prices should rise faster than inflation over the next few years due to strong fundamentals,” says Ralph G. DeFranco, global chief economist for mortgage services at Arch Capital Services Inc. “Positive fundamentals include strong affordability, healthy job growth (2.7 million net new jobs over the past 12 months, but the pace slowed recently), and net household formations outpacing new supply.”

The new report breaks down its findings on the state and metro levels. It measures the likelihood that home prices will be lower in two years, based on recent economic and housing market data.

North Dakota is the most at risk of seeing home price decreases over the next two years, according to the report. In fact, it has about a 52% chance of seeing its average home price decrease. This is primarily due to a 3.9% year-over-year decrease in total employment – the largest employment decline in the nation. What’s more, North Dakota’s home prices are overvalued by about 21%, relative to historic norms, according to some estimates.

For more, click here.


Please enter your comment!
Please enter your name here