Experts Predict a Slowdown in Home Price Growth Until 2026

Home Price Growth Forecasts: Insights from Housing Experts

In a recent report released by Fannie Mae, a well-respected player in the housing finance sector, a panel of over 100 experts from various sectors of the housing industry provided their insights into the future of home prices in the United States. Following a notable increase of 5.3% in national home prices in 2024, these experts now predict a more moderate growth rate for the upcoming years.

The average forecast for home price growth in 2025 is set at 2.9%, dipping slightly to 2.8% in 2026. These projections contrast with last quarter's optimism, which estimated growth rates of 3.4% for 2025 and 3.3% for 2026. This shift highlights a growing consensus among the panelists regarding the potential cooling of the housing market after a robust year.

Understanding the Expert Panel's Insights

The quarterly Fannie Mae Home Price Expectations Survey (HPES), conducted in collaboration with Pulsenomics LLC, seeks to gather expert opinions on anticipated changes in home prices over the next five years. The panel consists of diverse participants from both the mortgage and housing sectors as well as academic circles, ensuring a well-rounded perspective on the market.

Among the critical data points revealed in the survey, the panelists were questioned about their expectations for the top 20 metropolitan housing markets in the coming year, addressing whether these regions would perform better or worse than the national average. Additionally, they speculated on the probability of national year-over-year home price growth turning negative before the close of 2026. These findings are crucial for stakeholders in real estate, mortgage lending, and related industries, who rely on accurate forecasts to inform their strategies and business decisions.

Why the Change in Predictions?

The shift from earlier optimistic forecasts to more cautious estimates can be attributed to a variety of factors affecting the housing market. Economic indicators, such as inflation rates, interest rates, and consumer sentiment, play significant roles in shaping housing market dynamics. As many potential homebuyers face higher costs prompted by escalating mortgage rates, their purchasing power is constrained, which can slow down demand for housing.

Moreover, concerns regarding economic stability and the potential for recession may lead to heightened caution among buyers and investors, prompting them to delay purchasing decisions. Consequently, this could contribute to reduced price escalations in the housing market.

The Role of Fannie Mae’s Research Group

Fannie Mae's Economic and Strategic Research (ESR) Group, led by Chief Economist Mark Palim, plays an integral role in analyzing market data and providing insights that reflect current trends and future expectations. Their research goes beyond surface-level analysis, diving into the historical context and emerging patterns in the housing market, which can inform stakeholder decisions. By pooling data from various sources and conducting rigorous studies, the ESR Group offers informed perspectives that have far-reaching implications.

Conclusion

While the projections shared by Fannie Mae's panel may seem tempered compared to last year, they reflect a realistic approach to understanding the complexities of the housing market. Prospective buyers and industry professionals should stay tuned to these trends and adjust their strategies accordingly as we progress through the coming years. As the market continues to evolve, Fannie Mae and its research initiatives remain dedicated to providing timely and accurate insights that empower stakeholders to make informed choices in navigating the housing landscape.