Expert Panel Sees Home Price Growth Easing in 2024 and 2025 as Home Listings Trend Upward

Rhea-AI Summary

The Q2 2024 Fannie Mae Home Price Expectations Survey (HPES) forecasts a slowdown in home price growth for 2024 and 2025, with expected increases of 4.3% and 3.2%, respectively, compared to 6.6% in 2023.

The survey, produced in partnership with Pulsenomics, , gathers insights from over 100 housing and mortgage experts.

Notably, the anticipated 30-year fixed mortgage rate for 2024 is projected to be 6.6%, up from a prior estimate of 5.9%.

Despite higher mortgage rates, for-sale home listings are trending upward, with 84% of respondents attributing this to a diminishing 'lock-in effect.'

However, ongoing affordability challenges could slow the conversion of listings to actual sales.

Experts see a potential easing in the housing affordability crisis but note that significant price surges since 2020 pose challenges for prospective homeowners.

Positive

• Home price growth expected to decelerate to 4.3% in 2024 from 6.6% in 2023.
• Experts forecast a 3.2% increase in home prices for 2025.
• For-sale home listings are trending upward despite higher mortgage rates.
• Majority of experts see weakening 'lock-in effect,' potentially increasing listings.
• 30-year fixed mortgage rate projected to close 2024 at 6.6%, higher than last quarter's estimate of 5.9%.

Negative

• Rising mortgage rates to 6.6% in 2024 could strain affordability for homebuyers.
• Ongoing affordability challenges may slow conversion of listings to actual sales.
• Housing affordability crisis still a significant hurdle due to over 50% price surge since early 2020.
• Projected home price growth rates lower than previous expectations (4.3% for 2024 vs. 3.8% last quarter).
• Expectations for 2025 home price growth (3.2%) also dropped from the previous quarter's 3.4%.

Panel Also Expects Mortgage Rates to Close 2024 Near 6.6%

WASHINGTON, June 6, 2024 /PRNewswire/ -- Following home price growth of 6.6% in 2023, a panel of housing experts forecasts annual national home price growth of 4.3% in 2024 and 3.2% in 2025, according to the Q2 2024 Fannie Mae (OTCQB: FNMA) Home Price Expectations Survey (HPES), produced in partnership with Pulsenomics, LLC. The HPES polls over 100 experts across the housing and mortgage industry and academia for forecasts of national home price percentage changes in each of the coming five calendar years, as measured by the Fannie Mae Home Price Index (FNM-HPI).

The panel's latest estimates of national home price growth are higher than last quarter's expectations of 3.8% for 2024 but lower than the previous quarter's expectations of 3.4% for 2025. On average, the panel also projects the 30-year fixed mortgage rate to close 2024 at 6.6%, up significantly from the prior quarter's 5.9% forecast. Furthermore, on the recent upward trend in for-sale home listings despite generally rising mortgage rates, 84% of respondents believe that homebuyer and home-seller sensitivity to the "lock-in effect" is diminishing and contributing to the increases in listings. Additionally, a majority would expect any loosening of that effect to result in either "somewhat" or "significant" deceleration in home price growth. Complete results of the Q2 2024 HPES can be found here.

"The rise in mortgage rates in 2024 and continued above-trend home price growth continue to strain home purchase affordability," said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. "Listings have trended generally upward of late, suggesting to us that a rising number of current homeowners can no longer put off moving. However, we believe the ongoing affordability challenges are likely to weigh on how quickly these new listings convert to actual sales. On average, the expert panelists expect only a modest decline in mortgage rates through the rest of the year, and a majority also see the 'lock-in effect' weakening, which would likely lead to a gradual uptick in for-sale listings and continued moderation of home price growth over the forecast horizon."

Terry Loebs, founder of Pulsenomics, added: "A slowdown in home price growth and easing mortgage rates offer a glimmer of hope that the peak of the housing affordability crisis may be behind us. However, the price surge of over 50% nationwide since early 2020 has created a high hurdle that will, unfortunately, keep many aspiring homeowners on a slower path to achieving their dream."

To receive e-mail updates regarding future HPES updates and other economic and housing market research from Fannie Mae's Economic & Strategic Research Group, please click here.

Opinions, analyses, estimates, forecasts, beliefs, and other views of Fannie Mae's Economic & Strategic Research (ESR) Group, Pulsenomics, LLC and the surveyed experts included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR Group bases its opinions, analyses, estimates, forecasts, beliefs, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, beliefs and other views published by the ESR group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.

About Fannie Mae's Home Price Expectations Survey
Fannie Mae's Home Price Expectations Survey (HPES), produced in partnership with Pulsenomics, LLC, polls over 100 experts across the housing and mortgage industry and academia for forecasts of national home price percentage changes in each of the coming five calendar years, with the Fannie Mae Home Price Index as the benchmark. On a quarterly basis, Fannie Mae plans to publish the latest panelist-level expectations, as well as a special topic report that includes respondent feedback on topical questions designed to help inform the broader housing industry. The Q2 2024 HPES had 108 respondents and was conducted by Pulsenomics, LLC between May 9, 2024 and May 21, 2024.

About the ESR Group
Fannie Mae's Economic and Strategic Research Group, led by Chief Economist Doug Duncan, studies current data, analyzes historical and emerging trends, and conducts surveys of consumer and mortgage lender groups to provide forecasts and analyses on the economy, housing, and mortgage markets. The ESR Group was awarded the prestigious 2022 Lawrence R. Klein Award for Blue Chip Forecast Accuracy based on the accuracy of its macroeconomic forecasts published over the 4-year period from 2018 to 2021.

About Fannie Mae
Fannie Mae advances equitable and sustainable access to homeownership and quality, affordable rental housing for millions of people across America. We enable the 30-year fixed-rate mortgage and drive responsible innovation to make homebuying and renting easier, fairer, and more accessible. To learn more, visit:
fanniemae.com | Twitter | Facebook | LinkedIn | Instagram | YouTube | Blog

About Pulsenomics
Pulsenomics^® is an independent research and index product development firm that leverages expertise in data analytics, opinion research, financial markets, and economics to deliver insight and market intelligence to institutional clients, partners, and the public at large. To learn more, visit pulsenomics.com.

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SOURCE Fannie Mae

FAQ

What is the projected home price growth for 2024 according to Fannie Mae?

The projected home price growth for 2024 according to Fannie Mae is 4.3%.

What is the expected 30-year fixed mortgage rate for 2024?

The expected 30-year fixed mortgage rate for 2024 is projected to be 6.6%.

How much did home prices grow in 2023?

Home prices grew by 6.6% in 2023.

What are the home price growth expectations for 2025?

The home price growth expectations for 2025 are 3.2%.

What percentage of experts believe the 'lock-in effect' is diminishing?

84% of experts believe the 'lock-in effect' is diminishing.

What trend is observed in for-sale home listings despite rising mortgage rates?

For-sale home listings are trending upward despite rising mortgage rates.