From Fortune:

Mortgage rates are dropping, but with a 30-year fixed average of 6.69%, it won’t bring down home prices. Capital Economics predicts home prices to go up 5% annually, a big jump from its previous 1.5% forecast. Morgan Stanley forecasts a 3% drop, Redfin 1%, and Zillow 0.2%. Supply and demand are the deciding factors.

Capital Economics anticipates more demand and a 27.5% decline in the median mortgage payment. It hopes that this would create more buyers in the market. However, the lock-in effect is expected to still have an impact on housing supply. Despite this, there has been a slight improvement in existing home sales.

According to Capital Economics, current and new home sales will increase, and in November, new home sales were running at a seasonally adjusted annual rate of 590,000. From the increase in sales, single-family home starts will also increase, but they will still be lower than during the construction boom from 2020 to 2022.



Read more: Capital Economics just revised its home price forecast, predicting a 5% jump in 2024