Will Home Prices Go Down in 2027?

Short Answer: In dollars, probably not. After inflation, probably yes.

My forecast is that U.S. home prices will rise about 2% in 2027, as measured by the S&P Cotality Case-Shiller National Index. With inflation expected to run around 2.5%, the typical home will be worth a bit less in real terms a year from now, even though its dollar value should go up.

Locally, I expect Seattle to be a little weaker, somewhere between flat and +1.5%.

Where Things Stand Today

Prices are rising, barely. Case-Shiller had national prices up 1.9% from a year earlier in July. Headline inflation [CPI] was 3.4%.

You may see slightly different numbers elsewhere. NAR reported growth of 2.5% over the same timeframe, but they report the median price of homes sold, which shifts depending on which homes happen to sell. Case-Shiller tracks repeat sales of the same homes over time, so it’s a cleaner read on how values are actually changing.

There’s more on the market. According to NAR, existing-home supply was at 4.8 months in September and that’s up from 4.5 months a year ago. That’s still short of the roughly six months that marks a balanced market. Buyers have more choices and more room to negotiate, but this isn’t a glut.

Rates are still the problem. The 30-year fixed rate was 7.33% as of October 23. At that rate, the monthly principal and interest on a median-priced Seattle home is about $5,879, compared with $3,605 when rates were near 3%.

My Forecast

U.S. prices rise about 2%. Most owners are sitting on cheap mortgages and won’t sell unless they have to, and supply is still tight in most of the country. That keeps a floor under prices. High rates and growing inventory keep a lid on them.

This assumes the job market holds up, rates don’t climb much further, and inventory keeps rising gradually rather than all at once. If any of those breaks, more markets slip into actual price declines.

Seattle comes in between flat and +1.5%. Prices here are down from a year ago, but asking prices have stabilized, so I don’t expect much further decline. The risk still runs to the downside. Seattle is expensive, so high mortgage rates hit harder here than in most markets. The local economy also leans heavily on tech, which has been shedding jobs.

Prices won’t move as one market, either. The Eastside, Seattle proper, and the suburbs to the north and south can go in different directions in the same year.

What It Means

If you own, your home will probably be worth a little more next year in dollars. It just won’t keep up with everything else.

If you’re selling, price to today’s market, not to what homes sold for at the peak. Buyers have more options than they did a year or two ago, and overpriced listings will sit.

If you’re buying, don’t wait for a big price drop. It probably isn’t coming. Watch rates instead. A one-point drop in mortgage rates cuts the monthly payment by roughly 10%, far more than the 2% price change I’m expecting.

The Bottom Line

Prices rising by about +2% nationally and flat to +1% in Seattle, but both will be lower once adjusted for inflation . The biggest risk to this call is that rates stay high while inventory keeps building and buyers simply step back.