U.S. home prices are forecast to increase only 2.2% over the next 12 months, according to valuation services provider Veros Real Estate Solutions – a significant slowdown in home price appreciation compared with a year ago.
Meanwhile the housing market is “stuck in neutral” as home buyers sit on the sidelines due to mortgage rates averaging above 6.6%, stubbornly high home prices, and rising economic uncertainty.
Veros notes in its latest VeroFORECAST that the average monthly mortgage payment is up 35% compared to 2021 levels “purely due to the jump in interest rates.” That is pushing monthly payments for new buyers “well beyond comfortable limits.”
“This has significantly narrowed the pool of qualified buyers, especially first-time homeowners and those without substantial savings or equity from an existing property,” the firm says.
Although inventory is up in certain markets – particularly in parts of Florida, Texas and the Southwest – it has not translated into price relief for buyers.
“Many sellers remain reluctant to lower asking prices, especially those who locked in mortgage rates below 4 percent during the pandemic and feel no urgency to move,” the firm says. “This disconnect between what buyers can afford and what sellers expect continues to stall transactions, leaving the market in a frozen state.”
Adding to these challenges is a broader sense of economic uncertainty driven by geopolitical tensions, market volatility, and unpredictability in policies.
Photo: Dillon Kydd