Home Price Declines Are Possible But Rare for Most Housing Markets

As the Fed continues to put upward pressure on interest rates to cool rising inflation, a growing number of homebuyers are being priced out of their regional home searches, and nearly every major real estate firm predicts more price gains throughout the remainder of 2022. On the upside, the economic shock caused by spiking mortgage rates could put a damper on homebuyer demand and lead to a subsequent drop in home values, especially in overpriced markets, Fortune reports.

The regional markets with the highest odds of a price correction are predominantly located in northern towns on both the East and West coasts, including Hartford, CT, Lewiston, ME, and Mount Vernon, WA, among others. Still, 86% of regional housing markets tracked by CoreLogic have a "very low" or "low" likelihood of a price decline in 2022, meaning that price reductions, though possible, will be very rare across the U.S.

Even in the face of soaring mortgage rates, CoreLogic still thinks the chances of prices declining in 2022 are fairly low. Why? The real estate research firm points to the mismatch between inventory and strong buyer demand. That's also reflected in its national forecast. Over the coming 12 months, CoreLogic predicts U.S. home prices are poised to rise 5%. That'd mark a deceleration from the 19.8% jump posted over the past 12 months, but it's hardly the relief priced-out buyers are seeking.

Read more