A housing market downturn kickstarted by the Federal Reserve is already spurring major price corrections in markets such as Seattle and Las Vegas, and while experts predict the current market recession will spill over into 2023, buyers and sellers across the country are wondering just how long it could last. According to Wells Fargo, the remainder of 2022 could see sharp declines in new-home sales (-10.5%), existing home sales (-7.4%), single-family housing starts (-7.3%), and housing GDP (-10.1%), and that may just be the beginning.
In 2023, Wells Fargo forecasts another drop in new-home sales (-6.5%), existing home sales (-13.1%), single-family housing starts (-12%), and housing GDP (16%), and the bank also expects mortgage rates to remain above 6% through Q4 2023, Fortune reports.
"Markets where home prices shot the highest are now vulnerable to a disproportionate swing to the downside, notably in previously white-hot markets in the Mountain West which saw an influx of remote workers at the onset of the pandemic. Home prices in desirable locations with comparatively tighter supply are likely to hold up much better," writes Wells Fargo researchers.
Unlike the six-year housing downturn that started in 2006, Wells Fargo predicts this ongoing housing downturn should fizzle out heading into 2024. In fact, Wells Fargo predicts in 2024 that housing GDP will rise 5.1% while U.S. home prices rebound by 3.1%.