As we begin the second half of the year, economists, researchers and the like are revisiting their 2023 predictions to see how their projections are holding up. And financial giant Morgan Stanley appears to be revising its prediction that home prices would fall by year’s end.
In a note to clients on Tuesday, the firm’s research team called for home prices to end the year flat as opposed to declining following the pandemic highs of the last few years.
“We now expect home prices to end the year flat to December 2022 as opposed to our prior base case of -4 percent,” James Egan, a strategist at Morgan Stanley, wrote. “While we continue to believe that year-over-year home price growth will turn negative next month, we expect the time below zero will be short. We think there is more room to the upside in our home price forecasts than the downside.”
On behalf of Morgan Stanley, Egan previously hypothesized that year-over-year home price growth in 2023 would turn negative in the first half of next year before finishing 2023 down 3 percent.
Back to the current outlook, Morgan Stanley expects sales to finish 2023 14 percent below 2022 levels while new home sales scratch out a 2 percent gain.