Home Prices Set To Climb In 2024: Will Your Region Emerge As Winner Or Loser?

Benzinga - by Piero Cingari, Benzinga Staff Writer.

Good news for U.S. homeowners: Zillow Group Inc. (NASDAQ:ZQ) anticipates a 4.2% increase in the average house price across the United States from January 2024 to January 2025, underscoring the resilience of the U.S. housing market, even as it navigates through economic challenges and remains under the pressure of high interest rates.

Although this growth rate is a step-down from the 6.1% year-on-year rise reported Tuesday by the S&P CoreLogic Case-Shiller 20-city home price index in December 2023, the highest since November 2022, it still represents a solid increase in a period marked by heightened mortgage rates.

However, the U.S. housing market’s performance will vary significantly across different regions.

Challenges And Resilience In Supply And Affordability A key factor in the housing market’s resilience is the declining availability of homes.

The market for used properties has stagnated, with potential sellers holding back due to favorable mortgage rates secured in the past, while the supply of new homes has not kept pace with demand.

In January 2024, housing starts plummeted by 14.8% to an annualized rate of 1.331 million, the steepest decline since April 2020, underscoring the supply challenges faced by the market.

Overall, the pace of housing starts remains significantly below the levels observed in 2007, before the onset of the housing crisis.

“Housing affordability remains the biggest challenge for many existing homeowners and potential homebuyers. Mortgage rates soared to the highest level in 23 years in October before easing at the end of the year. However, easing mortgage rates at the end of the year brought buyers – and some sellers – back into the market,” said Zillow senior economist Orphe Divounguy.

The economist explained that the housing market was supply constrained in 2023 and the increase in supply bodes well for potential home buyers and housing sales this spring.

Stocks within the homebuilder sector, as monitored by the SPDR Homebuilders ETF (NYSE:XHB), have surged almost 50% since late October 2023.

Zillow’s Home Price Projections: Identifying the Top And Bottom US Regions for Growth Based on the data provided from the Zillow Home Value Forecast, the cities expected to show the strongest home price growth up to January 2025 are:

• Clewiston, FL with a forecasted growth of 9.9%
• Jackson, WY with 9.3%
• Wauchula, FL with 8.9%
• Butte, MT with 8.7%
• Mountain Home, ID with 8.7%

On the other end of the spectrum, there are 69 regions out of the 895 analyzed by Zillow that will see a contraction in home prices for the upcoming year. The cities with the expected lowest growth or even a decrease in home prices are:

• Greenville, MS with a significant decrease of 11.7%
• Helena, AR with a decrease of 7.2%
• Alice, TX with a decline of 6.8%
• DeRidder, LA with a dip of 6.7%
• Hobbs, NM with a dip of 6.4%

Source: Datawrapper

Read now: Apple Abandons Electric Car Project To Focus On Generative AI

Photo: Unsplash

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Read the original article on Benzinga