Then in 2014 they are predicting growth of 4.4%, up from prior expectations of 4.2%, according to the latest Zillow Home Price survey conducted at the beginning of March.
This means that the average price of US homes is likely to rise to $165,280 by the end of the year. At the end of 2012 the average value was $156,800.
Some of those taking part in the quarterly survey expressed concerns that the Federal Reserve could be inflating a new housing bubble.
Also, although they were more bullish on near term home value appreciation this year and into 2014, their expectations for nationwide home value growth in 2015, 2016 and 2017 were slightly more pessimistic than in prior surveys.
On average, panellists said they expect annual home value growth between 3.5% and 3.7% from 2015 through 2017, down modestly from previously expressed expectations in the 3.6% to 3.8% range. Cumulatively, survey respondents predicted home values to rise 22.3% on average through to 2017.
‘The panel's expectations of near term home value appreciation remaining above historic norms are consistent with a market struggling to satisfy strong demand from buyers attracted by rock bottom interest rates and improving economic conditions,’ said Zillow chief economist Stan Humphries.
‘But looking further out, that appreciation will have to moderate as interest rates rise, or else homes that seem affordable today, despite rapidly rising values, are going to look very expensive relative to people's incomes as it gets more costly to finance a home,’ he explained.
‘How the Federal Reserve handles the eventual winding down of its policy of quantitative easing will be critical in determining if the current period of rapid appreciation is a benign bounce off the bottom, or a more dangerous bubble being re-inflated,’ he added.
The most optimistic of panellists predicted a 6.6% annual increase in home values in 2013, on average, while the most pessimistic predicted an average increase of 4.2%. Expectations among both the optimists and pessimists were up from prior predictions of 6.1% and 3%, respectively.
Expectations for cumulative home value changes through 2017 ranged from 32.8% on average among the most optimistic, to 12.3% among the most pessimistic.
The survey asked the panel if the Federal Reserve's current monetary policy aimed at keeping mortgage interest rates near historic lows risked inflating a new housing bubble. Just 4% said they saw no risk of a new bubble, some 48% said they saw a little risk and another 48% said there was a moderate to high risk of a new housing bubble forming as a result of current policies.