Fannie Mae Panel Sees Home Price Growth Easing as Home Listings Trend Upward
(Illustration courtesy of Fannie Mae)
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 Fannie Mae Home Price Expectations Survey.
The HPES polls more than 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. 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 said they would expect any loosening of that effect to result in either “somewhat” or “significant” deceleration in home price growth.
“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.”
Duncan noted that on average the 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 that 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,” he said.
