House prices could fall over next 6 months as stocks reach highest level since GFC

Pending home sales fell 7.4% year over year in April, according to data from the National Association of Realtors. Meanwhile, the number of unsold homes on the market increased 16% in April compared to the same period in 2023. This represents the largest annual increase in unsold inventory since the Great Financial Crisis, Nick said.

The move comes as mortgage rates have hovered around 7% for all of 2024 and stubbornly high borrowing costs finally appear to be weighing on buyer demand.

“As interest rates rise, inventories of unsold homes rise,” Nick said in a recent interview with Bloomberg Surveillance. “Percentage-wise, we’ve seen an increase. That’s going to put downward pressure on prices in three to six months.”

Prices will begin to fall toward the end of summer, once peak home-selling season is over, Nick predicted.

Any cut would be welcomed by buyers, many of whom have been sidelined over the past year or more by high borrowing costs and historically high house prices. The median sales price of a U.S. home increased 6% year over year in April, reaching a record high of $433,558, according to Redfin data.

Real estate experts generally expect housing affordability to improve over the next year. Home prices are starting to fall in major metro markets, and a growing number of homes on the market are seeing their prices drop, according to Redfin.