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Friday, September 30, 2022

Goldman Sees US House Prices Falling 5% to 10%

by Calculated Risk on 9/30/2022 01:47:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Goldman See US House Prices Falling 5% to 10%


The recent weakness in the housing market, combined with mortgage rates close to 7%, have led to some downwards revisions to house price forecasts. For example, from Goldman Sachs economists today:
Our G10 home price model suggests sizable nominal home prices declines from the peak of around 15% in Canada, 5-10% in the US, and under 5% in the UK. … We view the risks to these estimates as tilted to the downside
emphasis added
This is a significant downgrade from Goldman’s “stall” forecast from just a few weeks ago. ...

Real House PricesIt now appears house prices are falling even though inventory levels are still historically fairly low (by measures of active inventory or months of supply). ... Here is a look at existing home months-of-supply (inverted, from the NAR) vs. the seasonally adjusted month-to-month price change in the Case-Shiller National Index (both since January 1999 through July 2022). Note that the months-of-supply is not seasonally adjusted.

The last three months are in black showing a possible shift in the relationship.
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