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% U S home prices could fall as much as 20% next year - CBS News CBS News App Ukraine Crisis COVID Pandemic CBS News Live Managing Your Money Essentials Shopping Newsletters Watch CBS News MoneyWatch <h1>U S home prices could fall as much as 20% next year</h1> By Khristopher J. Brooks October 24, 2022 / 10:40 AM / MoneyWatch Prospective homebuyers holding off MoneyWatch: Prospective homebuyers put down payments on ice as mortgage rates rise 05:22 Home prices have&nbsp;plunged during the second half of 2022&nbsp;with demand for residential real estate cooling off in a number cities across the U.S. Prices could continue to fall by as much as 20% next year as mortgage rates climb and the housing market normalizes in wake of the pandemic, according to a noted Wall Street economist.
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% U S home prices could fall as much as 20% next year - CBS News CBS News App Ukraine Crisis COVID Pandemic CBS News Live Managing Your Money Essentials Shopping Newsletters Watch CBS News MoneyWatch

U S home prices could fall as much as 20% next year

By Khristopher J. Brooks October 24, 2022 / 10:40 AM / MoneyWatch Prospective homebuyers holding off MoneyWatch: Prospective homebuyers put down payments on ice as mortgage rates rise 05:22 Home prices have plunged during the second half of 2022 with demand for residential real estate cooling off in a number cities across the U.S. Prices could continue to fall by as much as 20% next year as mortgage rates climb and the housing market normalizes in wake of the pandemic, according to a noted Wall Street economist.
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Brandon Kumar 1 minutes ago
Ian Shepherdson, chief economist with Pantheon Macroeconomics, said in a report last week that tumbl...
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Sofia Garcia 1 minutes ago
cities as mortgage rates rise Home sales fell to 4.7 million last month, down 1.5% from August, acco...
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Ian Shepherdson, chief economist with Pantheon Macroeconomics, said in a report last week that tumbling demand for homes amid sharply rising mortgage rates is weighing heavily on housing prices.&nbsp; "[W]e expect home sales to keep falling until early next year. By that point, sales will have fallen to the incompressible minimum level, where the only people moving home are those with no choice due to job or family circumstances," he said. "Discretionary buyers are disappearing rapidly in the face of the near-400 [basis point] increase in rates over the past year." Economists at Goldman Sachs said they expect home prices to fall by a more modest 5% to 10% next year.&nbsp; Cities that saw the sharpest spikes in home prices last year are now seeing them return to earth, including places like Austin, Texas; Phoenix, Arizona; Salt Lake City, Utah; and Denver, Colorado.&nbsp;Mortgage rates have more than doubled over the last year - and could keep climbing<br>Some real estate markets cooling as mortgage rates hit 20-year highHome values plunge in some U.S.
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Ian Shepherdson, chief economist with Pantheon Macroeconomics, said in a report last week that tumbling demand for homes amid sharply rising mortgage rates is weighing heavily on housing prices.  "[W]e expect home sales to keep falling until early next year. By that point, sales will have fallen to the incompressible minimum level, where the only people moving home are those with no choice due to job or family circumstances," he said. "Discretionary buyers are disappearing rapidly in the face of the near-400 [basis point] increase in rates over the past year." Economists at Goldman Sachs said they expect home prices to fall by a more modest 5% to 10% next year.  Cities that saw the sharpest spikes in home prices last year are now seeing them return to earth, including places like Austin, Texas; Phoenix, Arizona; Salt Lake City, Utah; and Denver, Colorado. Mortgage rates have more than doubled over the last year - and could keep climbing
Some real estate markets cooling as mortgage rates hit 20-year highHome values plunge in some U.S.
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cities as mortgage rates rise Home sales fell to 4.7 million last month, down 1.5% from August, according to the National Association of Realtors.&nbsp; <h2>Rising interest rates could further tighten supply</h2> Mortgage rates have more than doubled this year. The average rate on a typical 30-year mortgage rose this week to 6.94%, from 6.92% last week and 3.2% in January.
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cities as mortgage rates rise Home sales fell to 4.7 million last month, down 1.5% from August, according to the National Association of Realtors. 

Rising interest rates could further tighten supply

Mortgage rates have more than doubled this year. The average rate on a typical 30-year mortgage rose this week to 6.94%, from 6.92% last week and 3.2% in January.
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Lily Watson 6 minutes ago
The average rate on 15-year, fixed-rate mortgages is now 6.23%, compared with 2.33% a year ago. Risi...
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The average rate on 15-year, fixed-rate mortgages is now 6.23%, compared with 2.33% a year ago. Rising rates have forced some homeowners to pump the brakes on selling their property because they would have to get a mortgage to buy another home as rates are surging.&nbsp; "It's entirely possible that even people who want to trade down will face a bigger monthly payment," Shepherdson said. "That's a good reason to stay put, thereby constraining supply." The inventory of unsold existing homes fell for the second straight month in September to 1.25 million, according to NAR data.&nbsp; The supply of homes available for sale will likely shrink next year, predicted Shepherdson, while noting that "prices have to fall substantially in order to restore equilibrium." The median home sale price rose to $384,800 in September, up 8.4% from a year ago, the NAR&nbsp;said.&nbsp; "We think inventory could increase modestly in the next month or two as homes sit on the market for longer, but new listings continue to decline as sellers retreat to the sidelines," Nancy Vanden Houten, lead U.S.
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The average rate on 15-year, fixed-rate mortgages is now 6.23%, compared with 2.33% a year ago. Rising rates have forced some homeowners to pump the brakes on selling their property because they would have to get a mortgage to buy another home as rates are surging.  "It's entirely possible that even people who want to trade down will face a bigger monthly payment," Shepherdson said. "That's a good reason to stay put, thereby constraining supply." The inventory of unsold existing homes fell for the second straight month in September to 1.25 million, according to NAR data.  The supply of homes available for sale will likely shrink next year, predicted Shepherdson, while noting that "prices have to fall substantially in order to restore equilibrium." The median home sale price rose to $384,800 in September, up 8.4% from a year ago, the NAR said.  "We think inventory could increase modestly in the next month or two as homes sit on the market for longer, but new listings continue to decline as sellers retreat to the sidelines," Nancy Vanden Houten, lead U.S.
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economist with Oxford Economics, said in a research note.&nbsp; <h2>How high will rates go </h2> Economists expect mortgage rates to continue climbing next year as the Federal Reserve further pushes up borrowing costs in a bid to curb inflation. Rates could reach 8.5% "which would be another big shock to the housing market," NAR Chief Economist Lawrence Yun told a group of real estate investors last week.
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economist with Oxford Economics, said in a research note. 

How high will rates go

Economists expect mortgage rates to continue climbing next year as the Federal Reserve further pushes up borrowing costs in a bid to curb inflation. Rates could reach 8.5% "which would be another big shock to the housing market," NAR Chief Economist Lawrence Yun told a group of real estate investors last week.
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Other analysts think mortgage rates could hit double digits.&nbsp; Surging mortgage rates cool U.S. housing market 01:58 Whalen Global Advisors said it expects rates to reach double-digits by April 2023. Mortgage rates have not hit those levels since 1989, when they were 10.25%.
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Other analysts think mortgage rates could hit double digits.  Surging mortgage rates cool U.S. housing market 01:58 Whalen Global Advisors said it expects rates to reach double-digits by April 2023. Mortgage rates have not hit those levels since 1989, when they were 10.25%.
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Jack Thompson 20 minutes ago
The highest mortgage rate in U.S. history was 16.64% in October 1981. Mortgage rates have soared nea...
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Wall Street analysts expect the Fed raise to raise its benchmark interest rate by up to an additiona...
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The highest mortgage rate in U.S. history was 16.64% in October 1981. Mortgage rates have soared nearly 3.8% since the end of 2021, according to Oxford Economics.
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The highest mortgage rate in U.S. history was 16.64% in October 1981. Mortgage rates have soared nearly 3.8% since the end of 2021, according to Oxford Economics.
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Isabella Johnson 20 minutes ago
Wall Street analysts expect the Fed raise to raise its benchmark interest rate by up to an additiona...
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A lot of the answer depends on how aggressive the Federal Reserve is going to go on rate hikes in it...
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Wall Street analysts expect the Fed raise to raise its benchmark interest rate by up to an additional 1.5% by year-end.&nbsp; "At the beginning of the year, it seemed very unlikely that mortgage rates would push past 6%," Lisa Sturtevant, chief economist for Bright MLS, told Realtor Magazine. "Now the question is how high will they go?
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Wall Street analysts expect the Fed raise to raise its benchmark interest rate by up to an additional 1.5% by year-end.  "At the beginning of the year, it seemed very unlikely that mortgage rates would push past 6%," Lisa Sturtevant, chief economist for Bright MLS, told Realtor Magazine. "Now the question is how high will they go?
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A lot of the answer depends on how aggressive the Federal Reserve is going to go on rate hikes in it...
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Brooks is a reporter for CBS MoneyWatch covering business, consumer and financial stories that range...
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A lot of the answer depends on how aggressive the Federal Reserve is going to go on rate hikes in its next two meetings." <h3>Trending News</h3> Plastic recycling is a "failed concept" in the U.S., study says U S home prices could fall as much as 20% next year Netflix will no longer allow you to share passwords for free Dry shampoo recalled over potential cancer-causing ingredient Talent agency CAA drops Ye after antisemitic posts Khristopher J. Brooks Khristopher J.
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A lot of the answer depends on how aggressive the Federal Reserve is going to go on rate hikes in its next two meetings."

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Brooks is a reporter for CBS MoneyWatch covering business, consumer and financial stories that range from economic inequality and housing issues to bankruptcies and the business of sports. Twitter Thanks for reading CBS NEWS.
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