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Housing Market Heats Up Again: Experts Forecast Price Slowdown Rather Than Crash

Economists have long been forecasting that the overheated housing market would subside as home values become a casualty of their own success.[0] Since August 2021, housing prices have increased at a faster rate than incomes, making it difficult to afford a home. Additionally, mortgage rates have doubled, but recently began to decrease slightly.[0] This has led to an overall rise in the annual growth rate for average house prices of 10.4% to March 2022, its highest level in nearly eight years.[1]

The Nationwide House Price Index found that the average rate for a 30-year fixed mortgage dropped to 6.09% last week, according to data from mortgage lender Freddie Mac. Despite this, the median price of an existing home sold in December was $372,700, a 2% increase from the same time a year ago.[2] Last week, the National Association of Realtors released a report indicating that the current streak of 130 consecutive months of year-over-year home price increases is the longest such streak ever recorded.[2]

According to Greg McBride, CFA, Bankrate's Chief Financial Analyst, it is more probable that prices will remain steady rather than experience a sharp decline.[3] Capital Economics' senior property economist, Matthew Pointon, anticipates a decrease of 5 percent by the middle of 2023, rather than a plunge.[3] Savills' research director, Lawrence Bowles, has predicted that average values will increase by 7.5 percent in 2022, as affordability issues are likely to keep price increases for the rest of 2021 to a minimum.[0]

Danny Blanchflower, a previous member of the Bank of England's policy-making team, declared that the rapid fall of house prices will force the UK central bank to swiftly adjust its stance on interest rates.[4] It is believed by a renowned American economist, known for forecasting the 2008 housing market collapse, that home prices could fall by an additional 15% in the course of 2021.[5]

However, inventories are still very low: The National Association of Realtors says there was a 2.9-month supply of homes for sale in December.[0] This ongoing lack of inventory indicates that the supply-and-demand equation simply won’t allow a price crash in the near future.[3]

Overall, while the heated market has cooled down, it’s not likely to experience an equally sharp drop soon.[3] Despite a stable economy, it is probable that an increase in interest rates will have a dampening effect.[0]

0. “House prices – Forbes Advisor UK” Forbes, 1 Feb. 2023,

1. “Weekly Mailbag: How the Housing Crisis Impacts Rentals” Rogue Economics, 27 Jan. 2023,

2. “Economist who called 2008 housing crash predicts another 15% drop in home prices” msnNOW, 6 Feb. 2023,

3. “Is the housing market about to crash? Here's what experts say” Yahoo! Voices, 3 Feb. 2023,

4. “Blanchflower Says Housing Market Collapse Will Force BOE Pivot” Yahoo Finance, 7 Feb. 2023,

5. “Economist Who Called 2008 Housing Bubble Says Big Declines Coming” Business Insider, 6 Feb. 2023,