Capital Economics Revises Home Price Forecast Upward

From Strong demand and tight inventory have brought existing home sales back to “normal” levels, and further gains are possible, according to the latest market report from Capital Economics. Additionally, market conditions may prompt lenders to “loosen the purse strings slightly” and lend a little more freely.These conditions, combined with broader economic indicators, lead Capital Economics to revise its previous forecast of a 5 percent price gain this year up to 8 percent. Next year’s projection is a smaller 4 percent gain.

Much of the recent demand in the housing market has been the result of investment activity. Though an uptick in sales from one investor to another indicates some investors may be leaving the market, Capital Economics is confident investor demand will remain strong overall this year.

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