Moody’s shares its top 10 cities for home-price appreciation over the next 3 years — including 5 with median prices under $170,000 — with home values on a national basis set to fall further

• Housing affordability is at its lowest level in decades.
• Moody’s economist Matthew Walsh says will put upward pressure on home prices in more affordable cities.
• He said markets like Albany, Kenosha, Syracuse, and State College will see appreciation.

According to the S&P CoreLogic Case-Shiller U.S. National Home Price Index, home prices in the United States have rebounded this year, climbing back to all-time highs in July after falling about 5% in the second half of last year.

However, according to housing-focused Moody’s economist Matthew Walsh, the housing market isn’t necessarily locked into a period of sustained high home prices.

On Thursday, Walsh told Insider that he expects national home prices to fall by another 4% by the end of the current cycle. While the lowest affordability in four decades is crushing demand, he believes that homeowners’ unwillingness to sell amid the highest mortgage rates in over 20 years will prevent a larger decline by keeping supply low.

Given the affordability crisis (see below for the National Association of Realtors’ Housing Affordability Index, which considers home prices, mortgage rates, and income), Walsh believes prospective buyers will increasingly favor low-priced markets over larger, more expensive markets, particularly those that have outperformed in recent years.

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“It’s places where the run up in mortgage rates maybe doesn’t have as great of an impact on qualifying incomes as it would elsewhere, or the run up in home prices has also been pretty modest relative to the national average,” he said. “It’s generally easier to afford homes here, which kind of sustains demand more than elsewhere, would be the overarching trend.”

The ten markets where Walsh sees the most upside from August 2023 to August 2026 are listed below. His projections are based on an internal model that identifies when price growth in a specific market becomes inconsistent with economic fundamentals, such as affordability trends.

While Walsh is most optimistic about these markets, he believes the gains will be gradual.

“It’s not explosive growth; it’s more like flat, gradual increases.” But that is in the context of broader declines,” he explained.

According to Redfin data, we’ve also listed the current median home price in each market.