The housing market is expected to return to pre-pandemic norms in terms of inventory and the share of purchases made by first-time homebuyers by 2024, according to a panel of housing market experts polled for the Zillow Home Price Expectations Survey.
Housing inventory has fallen from a monthly average of 1.6 million units in 2018 and 2019 to just over 1 million in 2021, and monthly figures in 2022 are lower still.
Inventory should return to a monthly average of 1.5 million units or higher in 2024, according to the largest group (38 percent) of respondents to Zillow’s survey. The second-largest group (36 percent) believes supply will bounce back to pre-pandemic levels in 2023, while 2025 earned the third-highest share of votes with 12 percent.
“Inventory and mortgage rates will determine how far and how fast home prices will rise this year and beyond,” Zillow Senior Economist Jeff Tucker said in a release. “We are seeing new listings returning to the market, slowly, as we enter the hottest selling season of the year, but this supply deficit is going to take a long time to fill.”
The share of first-time homebuyers dropped from 45 percent in 2019 to 37 percent in 2021, according to a Zillow survey of recent buyers. First-time buyers should regain their pre-pandemic share of the market in a couple of years, according to most experts polled, with 26 percent pointing to 2024, and 25 percent liking 2025. Eighteen percent of the experts polled did not believe the share will rise above 45 percent until after 2030, despite millennials (the largest U.S. generation ever) aging into their prime home-buying years before then.
Pulsenomics founder Terry Loebs said the panel’s average projections for home price growth in 2022 have been revised upward, from 6.6 percent three months ago to 9 percent in this survey.
“Against the backdrop of tightening Fed policy and increasing mortgage rates, this more bullish outlook for home values suggests that home inventory shortages will remain the dominant price driver this year,” Loebs said. “If price increases this year for homes, rents, energy, and food each exceed wage growth – as the panel expects – home affordability challenges will intensify further, especially for low- and moderate-income renters.”
Zillow economists forecast a 16.3 percent rise in typical home values from February through December.