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Economists predict May 2021 to be the time for dropping home prices, a result of economic damage and concern over the government’s ability to continue long term policies which have bolstered the housing market. Curbed reports that Corelogic’s forecast shows national home prices dropping 6.6% year over year by May 2021, and Haus predicts 0.5% to 2.5% drops from October this year to July 2021. The decreases would be a result of pent-up demand finally subduing later this year, says Curbed, and the end of federal benefits such as the CARES Act, along with mortgage forbearance.
Housing markets across the United States have proven incredibly resilient to the economic fallout of the coronavirus pandemic. Home sales have lagged since the outbreak of the virus in March but — more importantly to individual buyers and sellers — home prices have actually risen.
With the virus showing no signs of letting up, forecasters now believe that the pandemic could cause home prices to drop in 2021. The belated decline would come as a result of prolonged economic damage and rising uncertainty over the federal government’s longterm commitment to the policies that have kept housing markets afloat over the last four months.
“There’s a lot of uncertainty out there,” says Frank Nothaft, an economist with Corelogic. ”When we look at the mortgage market in particular, we have a lot of concerns that we’re going to see a spike in delinquencies and foreclosure rates as we get into 2021.”
