Winter is generally a slow season for the real-estate sector, but will it stay frozen or thaw out—and more importantly, will home prices keep rising, or fall?
Home prices and mortgage rates show few signs of falling at the end of October, as low inventory spurs competition among home buyers. Home buying demand is also drying up as many aspiring homeowners have decided purchasing a home is simply unaffordable.

The 30-year mortgage was averaging at 7.9% as of October 26, 2023. A home buyer buying a median-priced home of roughly $400,000 today has to earn 50% more than they would have if they wanted to buy a median-priced home at the start of the pandemic, Redfin said recently.

MarketWatch asked six economists for their take on whether home prices could fall—and if so, when?

Here’s what they said.

Moody’s Analytics: Home prices will fall by 10% ‘peak-to-trough’

“House prices nationwide are down 2-3% from their last summer peak, according to the Moody’s Analytics repeat sales house price index,” Mark Zandi, the company’s chief economist, told MarketWatch.

The 30-year mortgage may be currently nearing 8%, but it will likely average at 6.5% by the end of this year, Zandi said, and by 2024, it will fall to 5.5%. His forecast assumes that the U.S. economy will weaken and inflation will decelerate, but there will be no recession.

“Assuming no recession and the mortgage rate path I just described, I expect national house prices to ultimately decline by almost 10% from the peak-to-trough,” he continued, falling from a record set in 2022. “This will likely take a couple more years to play out as potential sellers are reluctant to sell their homes for obvious reasons.”

Ultimately, falling prices are good news for home buyers, he said: “These price declines are necessary to sufficiently restore housing affordability.”

Goldman Sachs: Home prices will fall for the rest of 2023

Wall Street bank Goldman Sachs expects home prices to fall for the rest of the year due to high mortgage rates and low inventory.

“While the sharpest declines in housing activity and prices are now long behind us, the recent jump in mortgage rates and the prospect that they are likely to remain elevated for the foreseeable future present headwinds to the economy’s most interest rate sensitive sector,” the Wall Street bank’s analysts wrote in an Oct. 22 note.

The bank expects home prices to fall 0.8% through December 2023.

But prices will have risen by 3.4% in 2023, as compared to the year before.

And in 2024, the bank expects home prices to grow only by 1.3%, “as supply remains tight but high rates weigh on affordability.”

LPL Financial: Modest decline in home prices by the end of the year

Home prices will “likely fall since demand is slowing,” Jeffrey Roach, chief economist at LPL Financial, told MarketWatch.

But prices won’t spiral downwards even though demand is drying up due to how low inventory is. That’s “a major factor keeping prices from falling as much as they normally would in an economic slowdown,” Roach said. “An unintended consequence of so many who refinanced to historically low rates is [that] many have golden handcuffs, keeping them in their homes with no expectations to move. Inventory of existing homes will stay low for this reason.”

Nearly all borrowers who have a mortgage have a rate below the current level of 7.79%, according to Goldman Sachs. Almost 90% of homeowners have rates more than 2 basis points below the prevailing rate, they added.

So “I see only a modest decline in home prices by the end of this year as affordability will continue to be a challenge for would-be first time buyers,” Roach said.

CoreLogic: Home prices may fall over the next few months

Like Goldman Sachs, CoreLogic’s chief economist Selma Hepp also expects home prices to drop over the next few months, but to end 2023 up compared to last year.

“While home prices may fall slightly over the next few months due to seasonality and surge in rates, CoreLogic does not forecast home prices to fall in 2023,” Hepp told MarketWatch.

“The overall increase in home prices in 2023 compared to 2022 is expected at 3.7%,” she added. “[And] home prices have already increased 5% between January through August.”

Hepp also stressed that while she doesn’t expect home prices to fall in 2023 as compared to 2022, there may be regional variations. “Some states will continue to see annual declines (such as states in Mountain West, particularly Idaho and Utah) as their monthly changes continue to show declines,” Hepp said.

Even though mortgage rates hitting 8% will have an impact on home prices, she added, “it’s hard to assume that home prices will decline given the severe lack of inventory of homes for sale which are also further constrained by rising rates (lock-in effect).”

A comparable period to today would be the 1980s, when the U.S. Federal Reserve aggressively hiked interest rates. The 30-year mortgage rose to double digits, which impacted home sales. Yet “home prices didn’t post a decline until the early 1990s,” Hepp said, “when prices dipped only less than 1%.”

Realtor.com: Home prices will ‘recover’ by the end of the year

Realtor.com’s Danielle Hale had a different take. She told MarketWatch that she expects home prices to remain strong through the rest of the year.

“While many experts anticipated significant price declines in 2023, the housing market has largely defied those expectations,” Hale said, “with home sales prices dipping on a year over year basis for just four months this spring, and typical home asking prices falling for just two this summer.”

So “even though we did not see a new peak for the existing home sale price this summer, late-year momentum has the market on track to recover for the calendar year,” Hale said. “We currently expect home prices in 2023 to finish just ahead of the 2022 average.”

Part of the reason why she believes prices will stay elevated is due to the strength of the labor market: “I expect that over time, easing home prices or slowing price growth, rising incomes, and falling mortgage rates will all help to bring the share of income that it takes to buy a home back to more historically typical levels.”

Comparing the 1980s to today, Hale, like Hepp, also noted that prices didn’t drop—they just slowed during that period. “From 1982 to 1984 annual price growth nationwide averaged 2 to 4% when the average annual single-family price growth had been in double-digit territory from 1977 to 1980,” Hale said.

(Realtor.com is operated by News Corp subsidiary Move Inc., and MarketWatch is a unit of Dow Jones, which is also a subsidiary of News Corp.)

National Association of Realtors: Home prices will inch up in 2023

The National Association of Realtors on Thursday released an updated—and more pessimistic—forecast on home prices for the rest of 2023 and 2024.

The NAR expects existing-home sales to fall in 2023 to the lowest level since the Great Recession in 2008, but the median price of a home in the U.S. will rise by 0.1% to $386,700.

In 2024, the group expects home prices to rise 0.7% to $389,500.