Goldman just dropped a housing market forecast for 2024

A quarter later, Goldman is back with an updated forecast, and it doesn’t see an ounce of relief in sight for buyers, although it says the “sharpest declines in housing activity and prices are now long behind us.” But higher for longer rates, higher home prices and depressed activity? Check, check and check.

Next year, for one, Goldman Sachs sees “sustained higher mortgage rates” having their most pronounced impact on housing turnover, according to its latest 2024 housing outlook released on Sunday. Nearly all borrowers have mortgage rates below the current market rate, which means they have almost no reason to move—that further tightens supply in an already underbuilt housing market. In other words, we’ve seen the lock-in effect at 7% rates nearly all year, now it’s time to see it at 8% mortgage rates. 

On the outlook for mortgage rates staying at their over two-decade high of 8%, stategists including chief economist Jan Hatzius “expect mortgage rates to remain elevated for the foreseeable future, dipping to just under 7% by the end of next year.”

Considering supply, demand, affordability, and home prices, Goldman Sachs’ housing model suggests that home prices, as measured by the Case-Shiller home price index, will fall 0.8% through December of this year. However, since home prices have risen 4.2% this year, by the bank’s estimate, that’ll bring us to a 3.4% year-over-year increase. And although Goldman…