--- title: For the First Time in 2 Years, People Think Home Prices Will Fall description: For the first time in two years, people think home prices will fall over the next 12 months. Most think that mortgage rates will rise too. authors: - name: Sarah Hansen role: Senior Writer url: https://money.com/author/sarah-hansen/ bio: Sarah Hansen is a senior writer at Money covering all things personal finance. Previously, she covered economic policy and capital markets on the breaking news desk at Forbes. education: Northwestern University, New York University at_money_since: 2021 articles: 347 covers: - Housing - Banking - Business - Career Advice - Credit - Credit Cards - Economy and Politics - Education - Health and Wellness - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes social: - https://www.linkedin.com/in/sarah-m-hansen/ former_staff: true editors: - name: Brad Tuttle role: Senior Editor url: https://money.com/author/brad-tuttle/ bio: Brad Tuttle is a former senior editor at Money with over 10 years’ experience covering a vast number of personal finance topics, including careers, cars, travel, budgeting, investing, insurance, credit cards, consumer psychology, real estate, banking, and shopping and deals. education: Columbia University School of Journalism, MS at_money_since: 2014 articles: 366 covers: - Housing - Banking - Business - Career Advice - Credit - Credit Cards - Economy and Politics - Education - Health and Wellness - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Professional Services - Retirement - Shopping - Taxes - Technology social: - https://twitter.com/bradrtuttle - https://linkedin.com/in/brad-tuttle-834b225 former_staff: true published: '2022-09-09T17:39:45.000Z' modified: '2024-01-10T17:39:38.000Z' section: Housing tags: - News word_count: 540 canonical: https://money.com/home-prices-will-fall-survey/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![For Sale Sign In Front Of Home With Downward Facing Arrows In The Sky Behind It](https://img.money.com/2022/09/News-People-Think-Home-Prices-Finally-Going-To-Fall.jpg) The housing market is [cooling rapidly](https://money.com/housing-market-cooldown-signs-predictions/) after two years of double-digit price growth, and consumers finally see light at the end of the tunnel — in the form of falling home prices. [Survey data](https://www.fanniemae.com/research-and-insights/surveys-indices/national-housing-survey) released earlier this week by Fannie Mae showed that on average, people expect home prices to fall 0.4% over the coming year. It's the first time people have anticipated a decline since August 2020. While consumer expectations don't always become a reality, most people were anticipating home prices to spike during the pandemic — which is exactly what's happened. The biggest growth expectations over the past three years came in May 2021, when people anticipated prices would increase roughly 4% over the next 12 months. That turned out to be a drastic underestimate. Between the second quarter of 2021 and the second quarter of this year, the median home price rose from $382,600 to $440,300, according to [data](https://fred.stlouisfed.org/series/MSPUS) from the Census Bureau. That's a 15% jump. The Fannie Mae survey polls roughly 1,000 people responsible for the financial decisions of their household every month. Last month, people expected home price growth of 1.9% — so something has clearly shifted in their mentality toward the end of the summer. Sure enough, a slowdown in price growth has already started. Recent data from real estate agent Redfin showed that in August, the average U.S. home sold for [less than asking price](https://money.com/homes-selling-below-asking-price/). That hadn’t happened since March 2021. In July, Zillow’s Home Value Index [dropped](https://money.com/home-values-fell-zillow-report/?ref=/homes-selling-below-asking-price/) for the first time in a decade. ## Mortgage rates rise, while homebuyers struggle One of the major drivers of the housing market turnaround is [mortgage rates](https://money.com/current-mortgage-rates/), which are soaring as the Federal Reserve raises its benchmark interest rate to combat inflation. This week, the average rate on a 30-year fixed-rate mortgage climbed to 5.89% — its highest level since 2008. People are expecting that trend to continue: 61% of those surveyed by Fannie Mae said they think mortgage rates will rise over the next year, while just 11% said they expected them to fall. Higher rates can help push down home prices, but they won’t necessarily make a tough housing market any easier to navigate. With borrowing costs continuing to rise amid the looming threat of a [recession](https://money.com/are-we-in-a-recession/), it’s become increasingly difficult for families to afford to buy homes. Combine that with the fact that many people expect home prices to fall in the coming months, and you have a recipe for both buyers and sellers dropping out of the market. “Homebuyers \[are\] anticipating home price declines,” Fannie Mae Senior Vice President and Chief Economist Doug Duncan said in a statement, “and potential home-sellers not keen to give up their lower, fixed mortgage rate – contributing to a further cooling in home sales through the end of the year.” With that in mind, it’s no wonder that a whopping 73% of people surveyed said they believe it’s a bad time to buy a home. 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