Veros: U.S. Home Prices To Rise About 4.4% In 2016

U.S. home prices are forecast to rise about 4.4% between Dec. 1, 2015, and Dec. 1, 2016, according to the VeroFORECAST report from Veros Real Estate Solutions.

Roughly 94% of markets are forecast to see home price appreciation during that period, the firm says. However, the rate of appreciation is expected to slow over the next two years.

“Our current VeroFORECAST update continues to show increasing strength for the next year and above last quarter’s update,” says Eric Fox, vice president of statistical and economic modeling at Veros, in a release. “However, in the 13- to 24-month forecast window, we expect the rate of appreciation to slow down with this forecast period, expecting only 2.3% appreciation. The primary driver for this weakening can be attributed to tightening already begun by the Federal Reserve, which is likely to cause mortgage interest rates to begin ticking upward.

“We don’t see dramatic increases in interest rates or a repeat of 2007 price declines,” Fox adds. “At this point, it simply looks like a slowing of the increase in house prices as we get well into 2016 and 2017.”

The firm predicts that certain markets will continue to see home price appreciation, while others will likely see some depreciation over the next two years.

“The top forecast markets are all showing appreciation in the 10% range, with the Pacific Northwest getting very hot,” Fox says. “Portland, Seattle and Bend are numbers one, two and four in the nation, respectively. Denver and San Francisco continue to be strong, as well, rounding out the top five.

“Most of these markets have strong economies, growing populations and months’ supply of homes around two months or less,” Fox continues. “With these conditions, it is difficult for these markets to do anything other than appreciate at a good clip. Oregon, Washington and North Carolina showed the biggest gains in one-year forecast levels from last quarter’s update. Top performing markets continue to confine themselves to California, Colorado, Florida, Washington and Oregon, which comprise 21 of the top 25 forecast markets.”


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