"$1 Trillion Plunge"... US Home Prices Bottomed Out, Set to Rebound Next Year

This year, the value of the U.S. housing market is expected to evaporate by nearly $1 trillion (approximately 1,300 trillion won). However, housing prices are projected to start rebounding from next year, with the recovery accelerating over the next three years.

On the 5th (local time), Bloomberg cited a survey conducted by housing market analytics firm Pulsenomics, which polled 107 economists and real estate experts, reporting that U.S. home prices are expected to decline by an average of 2% this year.

The sharp rise in mortgage rates due to aggressive interest rate hikes has cooled the housing market, leading to an expectation that the U.S. housing market value, which reached $47.9 trillion at the end of last year, will shrink to $46.9 trillion.

Among major U.S. metropolitan areas, Miami is expected to see a 1.2% increase, while most other major cities such as San Francisco (-6.9%), Austin (-4.2%), Seattle (-4.2%), Los Angeles and Phoenix (-3.5%), Las Vegas (-3.4%), and San Diego (-3.1%) are forecasted to experience declines in housing prices this year.

[Image source=AP Yonhap News]

Craig Lazzara, Managing Director at S&P Global, said, "Despite recent banking crises, the Federal Reserve (Fed) has not halted its tightening measures to curb inflation, so mortgage rate hikes and recession forecasts will act as headwinds for the housing market in the coming months."

Spring is typically a season when moving activity intensifies and demand for new homes rises, but this spring, the housing market is expected to remain sluggish due to the impact of interest rate hikes and other factors.

Hena Jones, an economic data analyst at Realtor.com, a real estate site operated by the National Association of Realtors (NAR), stated, "High borrowing costs and economic uncertainty are putting pressure on housing demand this spring."

Federal Reserve Chair Jerome Powell recently warned that fears of bank failures in the U.S. and Europe have led banks to tighten lending standards, making it more difficult to secure mortgages.

Meanwhile, there is also a forecast that the U.S. housing market, having bottomed out this year, will begin a rapid rebound next year and gain momentum in its recovery over the next three years.

Bloomberg reported, "Experts expect the U.S. home price growth rate next year to average 1.2%, followed by a strong market with an average annual growth rate of 4% from 2025 to 2027."