Housing forecasters are scrambling to adjust their price expectations.
Back in January, CoreLogic was predicting a more than 5% gain for nationwide home prices this year.
Now CoreLogic researchers are predicting that home prices across the country will be up by only 0.5% a year from now thanks to the impact of the COVID-19 pandemic.
Home purchases dropped by 26% year-over-year in the last two months of March, said Dr. Frank Nothaft, chief economist at CoreLogic.
“Rapid decline of purchase activity starting in the middle of March can be seen in other CoreLogic data and is consistent with our home price index forecast of slowing price growth in April,” Nothaft said in the report. “The first quarter GDP results showed that the country entered a recession in March.
“Unemployment claims have reached record highs and this economic environment will further impact the housing market into the foreseeable future.”
Home prices nationwide were still up 4.5% in March, reflecting purchases contracted before the pandemic hit.
Dallas-area home prices were 2.68% higher than in March 2019, CoreLogic estimates.
Looking at other Texas markets, the biggest annual price gains were in Austin (5.21%) and Houston (4.34%).
CoreLogic predicts that Houston home prices will fall by 1.9% during the next year with the combined impact of the oil price slide and the pandemic.
“Although the economic fallout from lockdown orders, put in place to fight the spread of COVID-19, will be profound, the basic supports for a rebound in home purchase activity remain in place,” said Frank Martell, president and CEO of CoreLogic. “Once the shelter-in-place policies are lifted, we expect millennials, who submitted home-purchase applications well into the crisis, to lead the way back to a positive, purchase-driven housing cycle.”
Zillow is predicting that nationwide home prices will fall by 2% to 3% through the rest of this year and rebound by the end of 2021.
Home sales across the country are expected to fall by as much as 60% this spring before beginning to recover, Zillow researchers anticipate.
“Much uncertainty still exists, particularly with some states beginning to reopen and experts warning of a possible second wave of the coronavirus in the fall,” said Dr. Svenja Gudell, Zillow’s chief economist. “However, housing fundamentals are strong — much more so than they were leading into the Great Recession — and that bodes well for housing in general.
“Despite the difficulties, we’re seeing several signs that there is still a good amount of demand for housing, and buyers, sellers and agents are growing more comfortable moving transactions forward where possible,” Gudell said. “For those who need to sell, buyers are out there, and there are ways to embrace technology and practice social distancing to ensure a safe process.”
(Article written by Steve Brown)