Plus, “sellers don’t have to sell,” said Mike Fratantoni, chief economist at the Mortgage Bankers Association, who expects home prices to be “flattish” next year as demand wanes but supply, which was already sharply limited after a decade of under-building following the 2007 housing crash, further pulls back.
Given all the moving parts, many analysts are either much more optimistic or very pessimistic.
“It’s almost comical to see the house price growth forecasts,” Mr. Popov said. “It’s either 3 percent growth or double-digit declines, with almost nothing in between.”
The car market remains weird, too.
The car market, a major driver of America’s initial inflation burst, is another economic puzzle. Years of too little supply have unleashed pent-up demand that is spurring unusual consumer and company behavior.
Used cars were in especially short supply early in the pandemic, but are finally more widely available. The wholesale prices that dealers pay to stock their lots have plummeted in recent months.
But car sellers are taking longer to pass those steep declines along to consumers than many economists had expected. Wholesale prices are down about 14.2 percent from a year ago, while consumer prices for used cars and trucks have declined only 3.3 percent. Many experts think that means bigger markdowns are coming, but there’s uncertainty about how soon and how steep.
The new car market is even stranger. It remains undersupplied amid a parts shortages, though that is beginning to change as supply chain issues ease and production recovers. But both dealers and auto companies have made big profits during the low-supply, high-price era, and some have floated the idea of maintaining leaner production and inventories to keep their returns high.
Jonathan Smoke, chief economist at Cox Automotive, thinks the normal laws of supply and demand will eventually reassert themselves as companies fight to retain customers. But getting back to normal will be a gradual, and perhaps halting, process.