- Home affordability will worsen again in 2024, according to Goldman Sachs.
- Persistently high home prices and lofty mortgage rates will keep pressure on buyers.
- Detailed below are 10 large US cities where home prices are rising and 10 others where they’re falling.
Prospective homebuyers will be disappointed by Goldman Sachs’ assessment of the housing market.
Purchasing a home will be even more difficult than previously anticipated in late 2023 and throughout 2024, according to four of the firm’s strategists and economists in a recent report.
According to Goldman Sachs’ most recent projections, home prices will rise 1.8% this year before rising 3.5% in 2024.
According to the firm, mortgage rates will remain high this year at 7.1% and 6.8% by the end of 2024. This is significantly higher than its previous projections of 6.6% and 5.9%, respectively. The move comes as the Wall Street titan’s rates team raised their targets for the 10-year US Treasury yield to 4.3% in 2023 and 2024, from 3.9% and 3.75%, respectively.
Higher borrowing costs will reduce the number of new mortgages created, according to the firm, but limited home supply will prevent prices from falling accordingly.
“While we remain confident in our current home price forecasts, we are also lowering our 2024 full-year mortgage origination forecast from $1.5 trillion to $1.35 trillion, anticipating additional weakness through both the purchase and refinance channels,” research analyst Roger Ashworth and three Goldman Sachs colleagues wrote in the note.
According to Corelogic Case-Shiller data cited in the note, property prices in the United States remain at all-time highs. The most recent data is from July, when US home prices rose 3.1% year over year and 0.65% from the previous month, for an annualized rate of 8.1%, according to Ashworth and company.
The gains were widespread, but most pronounced in the Midwest and Southeast. In contrast, some cities in the West and Southwest saw prices fall after skyrocketing during the pandemic. Smaller, less expensive homes have seen the greatest gains across all regions.
20 real estate markets to keep an eye on right now
Goldman Sachs’ housing market report detailed how home prices have changed in 20 major US cities over the last year. Ten of these metropolitan areas saw significant increases in property prices, while the other half saw decreases beginning in 2022.
The following are ten large cities with significant home price appreciation and ten more where values have fallen, making them more affordable for buyers. Each city’s year-over-year growth, total and annualized price growth since 2000, and median price are included.
It’s worth noting that nine of the ten largest metro areas with falling home price growth also appeared on Zumper’s list of 47 US cities where rents fell in September. Denver, Colorado was an exception.