Mortgage rates are still double compared to a year ago, but housing prices are easing since June. A monthly housing sentiment index from Fannie Mae showed sentiment improving from November to December.

The index is still lower than it was a year ago and just slightly off its record low set in October and November.

The housing market has been the most performing asset class over time. Home values rise even if there are stretches in between when the market slows down.

For example, in the five-and-a-half decades leading up to 2022, home prices adjusted for inflation climbed higher by 4.23 percent annually, according to statistical data from the U.S. Bureau of Labor.

However, in 2022, the U.S. housing market was up against a perfect storm of economic headwinds, including rising interest rates, high inflation, and the looming threat of a recession.

Similarly, Swedish households’ perceptions of home prices are starting to indicate that a bottom for the market may soon begin to emerge, according to a survey by SEB AB.

According to Bloomberg, values in the largest Nordic economy have plunged as much as 17% from a peak in March, among the worst declines globally since central banks began jacking up interest rates in response to soaring inflation rates. In Sweden, the hikes have fed through to households faster than in most other countries, as most mortgages are fixed for a relatively short period.

UK house prices have dropped for the fourth consecutive month as rising borrowing costs hit household finances, according to data published on Friday.

Average house prices fell 1.5 per cent between November and December, said mortgage provider Halifax. The decline marks a slowdown from the 2.4 per cent drop recorded between October and November.

The annual rate of house price growth slowed to 2 per cent in December, down from 4.6 per cent in the previous month.

Zillow predicts home values will rise by 1.3 percent in the next 12 months ending September 2023. The company also warns that based on the pace of pending home sales activity and mortgage applications, there are “significant downside risks to home sale volumes into 2023”.

CoreLogic Chief Economist Selma Happ suggests that thanks to a combination of depleting housing inventory, easing mortgage rates, and improved economic data, real estate values could stabilize in 2023.

According to a Zillow survey, the real estate market may revisit pre-pandemic levels in 2024 and first-time home buyers will likely reclaim market share in 2024. We also see that Capital Economics, a world research firm, expects housing prices to increase by 3 percent by the end of 2024.

Wall Street bank Goldman Sachs has issued a forecast for the housing market too. The firm predicts that while U.S. home prices will drop 5-10 percent over the coming year, the market will reach its bottom at the end of 2023. This will lead to leveling prices in 2024, which should stay stable through mid-year. Overall, the bank predicts a slow recovery in housing prices in 2024.

A 2022 Zillow poll suggests that housing inventories will strengthen by 12 percent in 2025, which would undoubtedly give buyers more leverage. A Zillow survey also found that 13 percent of participants expect homebuyers to be in the driver’s seat in 2025.