Zillow is forecasting home sales will drop 60 percent this spring and will not fully recover until the end of 2021.
But Zillow said buyer demand and healthy housing-market dynamics will prevent U.S. home prices from dropping more than 2 percent to 3 percent – or more than 1.7 percent year-over-year.
Zillow Chief Economist Svenja Gudell forecasts transactions building at a pace of about 10 percent each month through the end of 2021following the coronavirus-related drop.
“Much uncertainty still exists, particularly with some states beginning to reopen and experts warning of a possible second wave of the coronavirus in the fall,” Gudell said in a release. “However, housing fundamentals are strong – much more so than they were leading into the Great Recession – and that bodes well for housing in general.
“Despite the difficulties, we’re seeing several signs that there is still a good amount of demand for housing, and buyers, sellers and agents are growing more comfortable moving transactions forward where possible,” Gudell said. “For those who need to sell, buyers are out there, and there are ways to embrace technology and practice social distancing to ensure a safe process.”
Zillow said its forecast is based on published and proprietary macroeconomic and housing data, centers around a baseline prediction of a 4.9 percent decrease in U.S. GDP in 2020 and a subsequent 5.7 percent increase in 2021.