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Experts Anticipate Home Price Growth Will Moderate

A panel of over 100 housing experts has made projections regarding home price growth in the United States, indicating a notable decline in the rate of increase. Following a strong growth of 5.3% in 2024, the experts predict a more modest increase of just 2.4% in 2025, gradually tapering to 2.1% in 2026. This forecast comes from the latest Home Price Expectations Survey (HPES), conducted by Fannie Mae in collaboration with Pulsenomics, LLC.

The most recent figures represent a shift from previous projections made in the last quarter, where the anticipated home price growth for 2025 was estimated at 2.9% and 2.8% for 2026. Such adjustments reflect the changing dynamics in the real estate market, driven by various economic indicators and consumer sentiments.

Factors Behind the Slowdown

The survey's results highlight key factors contributing to the slowdown in home prices. One of the critical elements mentioned by experts is the increase in mortgage rates, which tends to discourage potential first-time homebuyers. Additionally, the overall economic climate, including inflationary pressures and shifting demographic trends, plays a significant role in shaping market expectations.

Insights on First-Time Homebuyers

The HPES also delves into trends related to first-time homebuyers, emphasizing the challenges they face in today’s market. Delays in entering homeownership seem to be influenced by rising prices and interest rates, which can deter many young buyers from making significant investments in real estate. Participants in the survey expressed concerns about whether younger generations will prioritize homeownership given these financial pressures.

Another aspect covered was the level of mortgage rates that would likely catalyze a resurgence in homebuying activity. Experts anticipate that a substantial decrease in rates could unleash pent-up demand, provided other conditions remain favorable. However, predicting when such a shift will occur remains speculative due to the complex interplay of economic factors.

Importance of Continued Monitoring

The full dataset from the HPES and further analyses on the topic can be found in the quarterly reports released by Fannie Mae. The findings from the latest survey are expected to inform stakeholders, including policymakers and real estate professionals, about potential market fluctuations moving into 2025 and beyond.

Fannie Mae’s Economic and Strategic Research (ESR) Group, led by Chief Economist Mark Palim, is responsible for analyzing these trends and providing insights that help shape borrowing and lending protocols. Their ongoing research ensures that industry players remain well-informed about the changes in the housing market.

The Pulsenomics firm, known for its expertise in providing economic insights and predictions, plays a pivotal role in gathering data from a diverse group of experts. By conducting this survey, they aim to facilitate informed decision-making not only for investors but also for consumers navigating the housing market.

In conclusion, while the anticipated home price growth seems set to decelerate over the next two years, ongoing assessments and expert opinions will remain crucial in understanding how the broader economic landscape might influence future trends in residential real estate. Stakeholders are encouraged to stay updated on these evolving forecasts to better navigate the dynamic housing market landscape.