{"id":156116,"date":"2023-08-04T12:38:16","date_gmt":"2023-08-04T18:38:16","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=156116"},"modified":"2024-01-08T07:16:16","modified_gmt":"2024-01-08T14:16:16","slug":"goldman-sachs-home-price-forecast-says-prices-will-go-sideways","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/goldman-sachs-home-price-forecast-says-prices-will-go-sideways","title":{"rendered":"Is Slow Growth the New Normal for Home Prices? Goldman Sachs Thinks So"},"content":{"rendered":"\n

The rapid appreciation the pandemic brought to home prices won\u2019t return anytime soon, but the housing market also isn\u2019t expected to crash\u2014at least not on a national level. <\/span><\/p>\n\n\n\n

That\u2019s according to the <\/span>Goldman Sachs forecast<\/span><\/a> for the Case-Shiller National Home Price Index through 2026. Housing supply constraints and high mortgage rates are currently putting pressure on housing prices from opposite sides. Prices nationwide are resilient to decline due to tight supply, but demand is also dampened by <\/span>affordability<\/span><\/a> concerns, which is preventing appreciation on par with the last decade. <\/span><\/p>\n\n\n\n

Mortgage rates <\/span>increased slightly<\/span><\/a> in the week ending July 27 to an average of 6.81% for a 30-year, fixed-rate mortgage. While this was down a bit from the November peak, rates are high enough to put downward pressure on price growth. <\/span><\/p>\n\n\n\n

But current homeowners who bought when mortgage rates were low are also <\/span>hesitant to sell<\/span><\/a>\u2014about 82% of respondents in a Realtor.com survey said they feel \u201clocked in.\u201d That\u2019s one of the factors suppressing housing inventory across the country, along with a <\/span>labor shortage<\/span><\/a> in the construction industry and high building material costs that have <\/span>slowed down<\/span><\/a> new builds. Low supply is putting upward pressure on home prices, and it\u2019s worse in <\/span>some areas<\/span><\/a> than others. <\/span><\/p>\n\n\n\n

It will take a while for that to change. Some analysts <\/span>predict<\/span><\/a> that mortgage rates will drop below 6% in 2024, but it\u2019s unlikely they\u2019ll return to 3%. Indeed, Lawrence Yun, chief economist at the National Association of Realtors, predicts we won\u2019t see rates that low again in his lifetime. <\/span><\/p>\n\n\n\n

Meanwhile, Goldman Sachs expects rates to hover around 6% for years. And though homebuilder sentiment is improving, new housing starts <\/span>dropped 8%<\/span><\/a> in June after an unexpected surge in May. Homeowners with low-interest mortgages are also likely to stay put until conditions change. <\/span><\/p>\n\n\n\n

Without much movement on the supply or demand side, Goldman Sachs predicts relatively stagnant prices over the next four years. <\/span><\/p>\n\n\n\n

Slow Price Growth in the Coming Years<\/span><\/h2>\n\n\n\n

Since 1976, national home prices have appreciated an average of 5.5% per year. In 2021, work-from-home arrangements and record-low mortgage rates caused housing prices to grow 19%. That makes the Goldman Sachs forecast look pretty meager. <\/span><\/p>\n\n\n\n

The firm\u2019s model predicts:<\/span><\/p>\n\n\n\n