A sharp run-up in mortgage rates has prompted speculation about possible cooling in house prices in the red-hot U.S. market, with real estate research firm Zillow lowering its home price forecast for 2023 by 1.6 percentage points.
Home prices have been on a tear amid broader inflationary pressures in the U.S. economy, with the most recent S&P Corelogic Case-Shiller Index showing a 19.2 percent year-over-year home price gain in January, the fourth-largest reading in the 35-year history of the data series.
But a rapidly evolving macroeconomic environment, with surging inflation prompting the Federal Reserve to embark on a path of monetary tightening in a bid to cool runaway prices, is driving speculation that home price dynamics will soften.
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