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But affordability is decreasing as prices and interest rates remain elevated. Strategists at Goldman Sachs no longer expect home prices to drop for the full year 2023.
They had expected that home prices would decline by 2.2% as interest rates rose and debt became more expensive. But the housing market has proved resilient, likely due to tight supply. Homeowners who are locked into lower rates aren't likely to give that up in exchange for new property. Therefore, new listings on the market are at record lows, and new construction isn't moving fast enough to meet demand, the August 15 note from Roger Ashworth and team read.
But determined home buyers aren't being deterred by higher interest rates, keeping home prices stable. Goldman predicts that the remainder of the year will see steady home-price growth of 1.8%. This is in line with the Case-Shiller National House Prices year-over-year forecast, which is a weighted average of house-price indexes for 381 metro areas.
Mortgage rates aren't expected to drop drastically this year either. The investment bank forecasts that the 30-year fixed rate will be at 6.6% in the final quarter of 2023 until it cools down to about 5.9% in 2024. ItMeanwhile, affordability isn't easing up. The average debt-to-income ratio on new mortgages has drastically increased since the pre-COVID years, now at 38%.
Below is a list of 20 major cities covered by the S&P CoreLogic Case-Shiller index with their year-over-year house price appreciation or depreciation.
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