Skip to main content

Housing market decline continues: Moody’s releases its revised forecast

What to know about Moody's Analytics housing market forecast

Moody’s Analytics released its forecast detailing the current state of the housing market decline. The company now predicts that U.S. home prices will likely fall 10% between the peak-to-trough ratio, which could greatly affect anyone looking to buy or sell a home in the next year or so. Here’s what you need to know.

Real estate agent in front of house for sale
Pexels

What has changed as the market begins to cool

Prices soared last year as the housing market adjusted to higher interest rates and inflation. And shortly after, we entered a period of downturn, as prices began to cool. During this period, “The slump subtracted a whopping 1.37 percentage points from GDP, the most since the final three months of 2007 and the start of the Great Recession,” said Fortune. On top of that, Fortune noted that “the average 30-year mortgage rate topped 7% […] for the first time since 2002.”

In October, the average 30-year fixed mortgage rate sat at 7.08%. According to Fortune, “Prior to October, the U.S. had not seen a 7-handle mortgage rate since 2002.”

This raises concerns for many buyers looking to move, refinance, or purchase a home.

For sale home sign in front of house that says "sold"

Is it the right time to buy or sell?

While many of Moody’s predictions focus on the market at a national level, the data presented on a regional basis from Moody’s housing market forecast highlights how the home price correction will vary dramatically. In total, Moody’s analyzed 322 regional housing markets. “Of those,” stated Fortune, “the firm predicts 100% will see a peak-to-trough home price decline.”

Furthermore, Moody’s Analytics expects “196 markets to see a home price decline greater than 10%,” said Fortune. The price corrections differ quite drastically, depending on the region. This places more emphasis on buyers and sellers being aware of their local fluctuations rather than on the national average alone.

Mark Zandi, the chief economist at Moody’s Analytics, spoke to Fortune about the forecast. “While Zandi expects the housing activity decline to bottom out in the coming months,” said Fortune, “the home price correction — which started this summer — could take years to play out.”

Zandi elaborates, saying, “Sellers are willing to sell. They realize they’re not getting ‘the price I could have gotten a few months ago, but it’s still much higher than I could’ve gotten three years ago.’ So, they feel like they’re doing OK. Even with these price declines, they’re still up a lot from where they bought the home originally.”

Simply put: Home prices rose high and fast months ago, but they haven’t cooled too dramatically — yet. For sellers, this can still be a prime time to put their homes up for sale if they want to take advantage of the higher property values.

Still, the time to buy is not yet at its ideal. “It’s all about affordability,” Zandi told Fortune. “First-time buyers are locked out of the market. They simply can’t afford mortgage payments. Trade-up buyers won’t sell and buy because it doesn’t make any economic sense.” So if you’re a first-time buyer or someone looking to trade up, it could be better to wait it out.

Moody’s Analytics forecast was built on the assumption the U.S. won’t slip into a recession. If the unemployment rate were to go up above 6% and a recession were to manifest, Zandi predicts home price declines would be much greater than his firm currently forecasts.

For now, when it comes to buying or selling your home, it’s best to keep an eye on the data and make decisions based on your personal needs and regional changes.

Editors' Recommendations

Amelia Wilson
Amelia Wilson (author pen name Amelia J. Wilson) is a content writer in Greenwood, IN. She often enjoys topics on…
A startling number of 2022 homebuyers are already underwater – find out why
Black Knight shared data that reveals many 2022 homebuyers have underwater mortgages
Red house with for sale sign in the front yard

It's fair to say that the post-pandemic world has created a confusing landscape in the housing market. With rising mortgage costs, hiking interest rates, and the allowance of reduced down payments for certain borrowers, the number of 2022 homebuyers underwater is increasing at an alarming rate.

Many homeowners are finding they owe more on their home loans than what their properties are worth. And with the threat of delinquency on the rise, this issue becomes all the more concerning. If you're a recent homebuyer, here's what you need to know about the increase in underwater mortgages.

Read more
The house maintenance tasks homeowners think first-time buyers should know
A few considerations when buying your first home
try these 11 bathroom diys you can do in one hour plumber

Buying a home for the first time isn't for the faint of heart. There are so many decisions you need to make and so many considerations to keep in mind before you sign on the dotted line. The biggest worry (beyond the biggest financial investment you're making) is what you don't know, especially regarding house maintenance. Luckily, we have the expertise of those who have come before us.

Redditor theforeverletter recently posed this question on the r/Home Improvement subreddit: "Homeowners who have been doing this for [a while], what regular maintenance do people need to do to their house they don’t know they should be doing? For those of you who know far more than me, I bought a house last year; what things do I/other first-time homeowners need to do to keep up with everything we may not know? Of course, this depends on the house (Septic/city water crawl space/no crawl space) and things can vary, but happy to learn as much as I can!" Hundreds of people were happy to share their advice, and we've taken some of the most popular, so you know what to look out for.

Read more
Sanding, primer, or both? This is how to prepare a wall for painting
Don't skip these important steps before you start your next paint job
Two people painting an interior wall

Painting is the easiest way to transform any room in your home. A simple coat of paint is all it takes to make a drab space become a vibrant, bright room that everyone will love hanging out in. However, when it comes to actually getting the painting job done, there are some preparation steps that you need to consider.

Painting requires a bit of prep work, regardless of what condition your walls are in. Walls with holes and dents may take longer to prep than walls that just need a coat of paint. Additionally, you may need to consider sanding, priming, and other prepping methods that'll help your painting project go smoothly and ultimately result in a stunning, finished look.

Read more