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Moody’s Analytics chief economist Mark Zandy says house prices will soon “correct” but not “crash.”

Many economists say the housing market is in recession, but when will house prices pick up?

Buyers are retreating as mortgage rates are slowly rising. More sellers are offering lower prices on their listings and more concessions to attract buyers.

Moody’s Analytics chief economist Mark Zandy told MarketWatch that house prices will soon undergo a “correction” against this backdrop.

But the fix doesn’t mean it’s any closer to what happened in 2008. “That’s not what we have here.”

Zandi appeared on CBS News PARA,
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Last month, it predicted that average home prices would “completely stall.”

He said first-time buyers were “locked out” of the market and unable to afford rising mortgage rates. His 30-year mortgage is at 5.66% as of Thursday. A year ago, 30 years he was 2.79%.

Investors are also sitting on the sidelines waiting for prices to fall. Home sales plummeted as buyers retreated.

“The crash is what happened in the financial crisis. It was a crash. That’s not what we have here.


— Mark Zandi, Chief Economist at Moody’s Analytics

“What happens next is that housing prices adjust,” Zandi explained.

He expects a low-single-digit decline of about 5% in most cases.

However, market forces and living conditions that force sellers to sell their homes regardless of the market drive prices down over time.

“We’re going to see a significant price drop,” Zandi said of the “pandemic boomtowns that were previously booming in the west, especially in the mountainous west and south to southeast.”

Zandy said a $500,000 home in Boise, Idaho, could fall between 10% and 15% in value. He also sees significant price revisions in other once-popular cities like Charlotte, North Carolina and Austin, Texas. He also said Phoenix, Arizona is seriously “overrated.”

Some of these markets are already showing signs of transformation. Redfin pointed out in late August that his 70% of homes for sale in Boise had already been marked down. Denver, Salt Lake City and Tacoma followed.

In early September, Redfin said pricing pressure was spreading across the country. The company said the average home has fallen below list price for the first time since March 2021.

According to Realtor.com, 1 in 5 homes have seen price cuts, dropping the average price to $435,000. The median listing price he hit a high of $450,000 in June.

Price adjustments take time. Sellers are reluctant to list homes on the market, Redfin said, because demand has cooled.

Thinking about the housing market? Write to MarketWatch reporter Aarthi Swaminathan ([email protected]).

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