Housing Market Expectations: Panel Adjusts Home Price Forecast with Caution for 2025 and 2026
In the latest quarterly update, housing experts have revised their expectations for national home price growth for 2024, now projecting an increase of 5.2%. However, a panel of over 100 specialists foresees a slowdown in the growth rate for the following years, predicting rates of 3.8% in 2025 and 3.6% in 2026, according to Fannie Mae's Home Price Expectations Survey (HPES). This revision signifies a slight increase from previous forecasts of 4.7% for 2024, 3.1% for 2025, and 3.3% for 2026.
The HPES, conducted in collaboration with Pulsenomics, LLC, gathers insights from experts across the housing and mortgage industries to derive consensus predictions about future home prices. This latest survey was conducted between November 12, 2024, and November 22, 2024, with 115 professionals participating. While the upward revision in price growth suggests some optimism, many analysts still expect the housing market to face challenges in the upcoming years.
Mark Palim, Fannie Mae's Senior Vice President and Chief Economist, expressed that while home price growth will likely ease, the broader picture for 2025 remains comparable to 2024. He highlighted that elevated mortgage rates and the substantial price increases experienced in recent years are likely to continue hampering affordability and discouraging potential homebuyers.
Moreover, the Economic Strategic Research (ESR) Group conducted a survey amongst panelists regarding their housing outlook for 2025. Many experts anticipate that existing home sales will continue to lag while new home sales show a slight upward trend. Predictions regarding mortgage rates suggest they will remain high but may see a modest decline, potentially averaging around 6.3%.
Interestingly, approximately 80% of the experts surveyed expect home price growth to decelerate due to persistent high mortgage rates, an increase in available housing inventory, and slower wage growth. Conversely, a minority of the panelists foresee faster price appreciation, attributing this outlook to strong demand from first-time homebuyers and a tightening inventory of houses for sale coupled with easing mortgage rates.
Terry Loebs, founder of Pulsenomics, added that although most experts anticipate a decline in home value appreciation nationwide, the projected average annual price increase through to 2029 remains above inflation expectations. This suggests ongoing affordability challenges that many prospective homebuyers will face well into the future.
The implications of these forecasts reflect broader economic conditions that are affecting the housing landscape. The potential for continued high mortgage rates and lackluster home sales stems from multiple factors, including inflationary pressures, supply chain issues, and increased costs of living. Many individuals seeking to enter the housing market are finding it increasingly difficult to do so, which might delay their homeownership ambitions.
As we move closer to the predicted timelines for these price changes, it will be crucial for buyers, sellers, and industry stakeholders to keep abreast of these changing dynamics. The upcoming quarterly surveys from Fannie Mae will provide valuable updates on market trends, enabling those involved in real estate to make more informed decisions. This ongoing monitoring will play a vital role in adapting to challenges and seizing opportunities as they arise within the evolving marketplace.
In conclusion, while 2024 may show some growth in home prices, the outlook for subsequent years suggests a cautious and more tempered approach to home buying and selling, with affordability concerns projected to persist. Keeping an eye on the evolving economic landscape and being flexible in adapting strategies will be key for navigating the housing market successfully.
The HPES, conducted in collaboration with Pulsenomics, LLC, gathers insights from experts across the housing and mortgage industries to derive consensus predictions about future home prices. This latest survey was conducted between November 12, 2024, and November 22, 2024, with 115 professionals participating. While the upward revision in price growth suggests some optimism, many analysts still expect the housing market to face challenges in the upcoming years.
Mark Palim, Fannie Mae's Senior Vice President and Chief Economist, expressed that while home price growth will likely ease, the broader picture for 2025 remains comparable to 2024. He highlighted that elevated mortgage rates and the substantial price increases experienced in recent years are likely to continue hampering affordability and discouraging potential homebuyers.
Moreover, the Economic Strategic Research (ESR) Group conducted a survey amongst panelists regarding their housing outlook for 2025. Many experts anticipate that existing home sales will continue to lag while new home sales show a slight upward trend. Predictions regarding mortgage rates suggest they will remain high but may see a modest decline, potentially averaging around 6.3%.
Interestingly, approximately 80% of the experts surveyed expect home price growth to decelerate due to persistent high mortgage rates, an increase in available housing inventory, and slower wage growth. Conversely, a minority of the panelists foresee faster price appreciation, attributing this outlook to strong demand from first-time homebuyers and a tightening inventory of houses for sale coupled with easing mortgage rates.
Terry Loebs, founder of Pulsenomics, added that although most experts anticipate a decline in home value appreciation nationwide, the projected average annual price increase through to 2029 remains above inflation expectations. This suggests ongoing affordability challenges that many prospective homebuyers will face well into the future.
The implications of these forecasts reflect broader economic conditions that are affecting the housing landscape. The potential for continued high mortgage rates and lackluster home sales stems from multiple factors, including inflationary pressures, supply chain issues, and increased costs of living. Many individuals seeking to enter the housing market are finding it increasingly difficult to do so, which might delay their homeownership ambitions.
As we move closer to the predicted timelines for these price changes, it will be crucial for buyers, sellers, and industry stakeholders to keep abreast of these changing dynamics. The upcoming quarterly surveys from Fannie Mae will provide valuable updates on market trends, enabling those involved in real estate to make more informed decisions. This ongoing monitoring will play a vital role in adapting to challenges and seizing opportunities as they arise within the evolving marketplace.
In conclusion, while 2024 may show some growth in home prices, the outlook for subsequent years suggests a cautious and more tempered approach to home buying and selling, with affordability concerns projected to persist. Keeping an eye on the evolving economic landscape and being flexible in adapting strategies will be key for navigating the housing market successfully.
Topics Financial Services & Investing）
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