Home prices will rise in 2023 as affordability crisis worsens, Goldman says

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The Mike Aubrey Group Executive Vice President and principal Mike Aubrey discusses whether the housing market has hit bottom on 'Cavuto: Coast to Coast.' 

Goldman Sachs strategists no longer expect home prices to fall this year, and are instead forecasting an increase that could keep pressure on would-be buyers who are already grappling with steep mortgage rates.

In a note to clients this week, the Goldman analysts estimated that home prices will rise by 1.8% this year because of limited inventory and stronger-than-expected demand.

«Housing supply continues to tighten,» they wrote. «On the existing home front, the inventory of homes available for sale remains historically low. New listings are being added at the lowest pace on record, driving positive net absorption even amid paltry purchase application volume.» 

MORTGAGE CALCULATOR: SEE HOW MUCH HIGHER RATES COULD COST YOU

Homes in Rocklin, California. ( Photographer: David Paul Morris/Bloomberg via Getty Images / Getty Images)

Even though mortgage rates are nearly double what they were three years ago, home prices have hardly budged. That is largely due to a lack of available homes for sale. Sellers who locked in a low mortgage rate before the pandemic began have been reluctant to sell, leaving few options for eager would-be buyers.

The number of available homes on the market at the end of July was down by more than 9% from the same time last year and down a stunning 46% from the typical amount before the COVID-19 pandemic began in early 2020, according to a recent report from Realtor.com.

Adding to the trouble is that builders have been slow to get new construction on the market. New listings are being added at the lowest pace on record, because many houses are