U.S. home prices are forecast to increase 2.9% over the next 12 months, according to Veros Real Estate Solutions’ quarterly VeroFORECAST report.
This is an upward revision from last quarter’s forecast of 2.4%.
Driving the increase is low housing inventory and resilient demand despite elevated mortgage rates, the firm says.
Rates are expected to hover above 6.5% throughout 2024 due to inflation exceeding the Federal Reserve’s 2% target and a strong labor market, although displaying some signs of softening.
Even with the high prices and mortgage rates, overall home prices are still trending up, driven by competition among homebuyers in the face of scarce listings.
Further, millennials, the nation’s largest demographic, are stepping into their prime home-buying years, further amplifying demand.
Because many homeowners are rate-locked into their current mortgages and many Baby Boomers plan to age in place, inventory is not expected to increase significantly in the next year.
The 10 strongest performing markets, poised for appreciation between 6%-7.5% over the next 12 months, predominantly hail from the Northeast and Midwest, boasting proximity to major metros and burgeoning opportunities catalyzed by the work-from-home trend. These include three in Pennsylvania – Lancaster, Reading, and Harrisburg; one in upstate New York – Rochester; two in New England – Manchester, N.H.; and Hartford, Conn.; and the remaining four in the Midwest – Rockford, Ill.; Grand Rapids, Mich.; Topeka, Kan..; and Indianapolis, Ind.
Photo: Dillon Kydd