Home prices will fall in half of the US next year, and places like California will be hit hardest, a top economist warns

• Home prices will fall in half the US in 2023, said the National Association of Realtors' chief economist.
• Lawrence Yun, who spoke at a real-estate conference, predicted 0% home-price growth next year.

Home prices will fall in about half the markets in the US next year, a top housing economist said on Thursday.

Lawrence Yun, chief economist at the National Association of Realtors (NAR), said he is forecasting 0% home-price growth in 2023.

That means prices will increase in about half of the areas that NAR tracks, but decrease in the other half, Yun said.

Yun, who was speaking to the National Association of Real Estate Editors conference in Atlanta, Georgia, said he predicts the home-price declines will be most dramatic in the most expensive parts of the country.

In California, for example, he predicts home prices will drop 5% to 10% in 2023.

He added that there are also many parts of the country where home prices may go up or stay the same.

"The Midwest will hold on better because it's affordable," he said. "Southern states will hold on better because of job growth and in-migration."

He reassured, however, that the possibility of a 30% drop in home prices — which is roughly what happened during the housing-market downturn of 2006 to 2012 — is slim. There are just too few homes for sale, Yun said.

Yun said that even though the way the US decides it's in a recession — by a secretive vote from eight economists — is too subjective, he still believes the descriptor fits the state of the economy right now.

"I would say we are in a recession," Yun said. "You just look at your 401(k) and you know."