Adobe Stock

According to a recent paper from Goldman Sachs, home prices are expected to decline roughly 6% and stop midyear. Questioning if the U.S. housing market recession is coming to an end, Fortune asked Zonda chief economist Ali Wolf for more insight on demand, home prices, and housing trends.

There has been an uptick in buyer interest since the beginning of the year related to three key things: seasonality, acceptance, and discounts.

Seasonality: The housing market traditionally is the slowest at the end of a given year, picks back up in January, and goes into full force during the spring selling season starting around the Super Bowl. Early indications are that buyers are out shopping again. Right now, it seems there are more buyers looking than actually signing contracts, but the increased traffic indicates underlying interest: 38% of builders reported to Zonda that traffic has been stronger than expected in January so far. A key thing to watch in the coming months is resale inventory. We saw many existing homeowners de-list their homes in November and December when their home didn’t sell as quickly or for as much money as they had hoped. The spring selling season usually brings more inventory with it, so we are watching to see if these sellers decide to re-list in this traditionally stronger time of the year for housing.

Acceptance: Consumers have been mourning the loss of record-low mortgage rates. For example, if a consumer was able to afford the monthly payment of a $500,000 house at the beginning of last year, without changing their budget, they are now looking for a house in the $350,000 range. For some consumers, they are unwilling or unable to move forward with a purchase. For others, they are entering the acceptance phase. We are on the 10th consecutive week of mortgage rates averaging below 7%. This stability in rates is giving consumers a bit more confidence about where the market is right now. Some existing home sellers and many builders are offering funds to help buy down the interest, with adjustable-rate mortgage options and 30-year fixed rate mortgage options.

Read More