The housing market is not expected to crash anytime soon, according to experts. The last housing crash contributed to the current lack of supply, which is keeping prices from falling. However, mortgage rates have been declining, making homeownership more affordable.
Despite the challenging housing market, economists do not foresee a crash in 2024 or beyond, unless the economic outlook changes significantly. Industry forecasts suggest home prices will continue to increase, with Fannie Mae predicting a 6.1% rise in 2024 and 3% in 2025. The Mortgage Bankers Association also forecasts price increases of 3.9% this year and 2.7% by the end of 2025.
The lack of housing supply is the primary reason why experts believe prices will not crash. The US is between 2.3 million and 6.5 million units short of a healthy housing supply. Even if demand drops, it is unlikely to fall low enough to push prices down significantly. Additionally, the last housing crash led to a decline in home construction, further exacerbating the supply issue. As more first-time and millennial homebuyers enter the market, the demand for homes continues to outpace the available supply.
