House Prices Forecast to Rise by This Much Over the Next Three Years

House prices in the U.S. are expected to edge higher by more than 1 percent this year and in 2024, before posting more significant annual gains, according to the latest forecast by the Mortgage Bankers Association (MBA).

The group, which represents the real estate finance industry, said house prices across the country are expected to continue growing in the next three years at a progressively higher rate, reaching increases of 3.2 percent in 2025 and 3.5 percent in 2026.

It's a grim prospect for aspiring homebuyers who have been squeezed out of the market in the past three years. During the pandemic, house prices skyrocketed across the country amid high demand, driven by relatively low mortgage rates and a historically short supply of homes.

This already difficult situation grew increasingly challenging for many homebuyers when mortgage rates suddenly surged last year as the Federal Reserve hiked interest rates to lower the rampant inflation.

In June last year, the typical home value in the U.S. topped $350,000, according to Zillow, an unprecedented price that marked the peak of the ongoing crisis of affordability in American housing.

After that, the market underwent what experts called a "correction" that brought prices down across the country, especially in the most overheated cities like Austin, Texas. Between January 2020 and June 2022, home prices in Austin had surged by 78 percent.

But as inventory remained limited across the country, with the number of listings active at any time still historically low, and demand remaining high, house prices started bouncing back by early this summer. This, the MBA report indicates, is why its experts believe home prices will rise in the next three years.

According to the latest data available on Zillow, which refers to September 30, the average U.S. home value is $348,539, up by 1.1 percent over the past year. In January, this was $340,332.

Zillow has also predicted that home prices will continue growing in the coming years, with a median price of $395,220 expected to be reached by 2033. Between July 2023 and July 2024, Zillow analysts expect home values to rise by 6.5 percent.

Other analysts warn we should be cautious before declaring the house market correction is over. As of late last month, Moody's expected median home prices to fall by 3.5 percent between the fourth quarters of 2023 and 2024, as reported by CNBC.

Newsweek contacted the MBA, Zillow and Moody's for comment by email on Tuesday.