Fannie Mae Panel Predicts Home Price Growth Will Decelerate in 2024, 2025

(Illustration courtesy of Fannie Mae)

A panel of housing experts forecasts annual national home price growth of 4.7% in 2024 and 3.1% in 2025, according to the third-quarter Fannie Mae Home Price Expectations Survey.

Home prices grew 6.0% in 2023.

Fannie Mae and Pulsenomics polled more than 100 industry analysts 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 4.3% for 2024 but lower than the previous quarter’s expectations of 3.2% for 2025.

“Recent measures of home price growth, including our own, have continued to come in stronger than previously expected, as reflected by the 100-plus HPES panelists who, on average, once again modestly upgraded their home price outlook for 2024,” Fannie Mae Vice President and Deputy Chief Economist Mark Palim said. “Strong home price appreciation has persisted despite purchase affordability remaining stretched for the vast majority of consumers, a dynamic that is still primarily a function of inadequate supply.”

Palim noted the panelists overwhelmingly agreed that there is a fundamental lack of housing in the United States relative to underlying demographic factors. They believe the nation to be short by approximately 2.8 million homes.

“The panelists also shared that they think speeding up construction permitting processes, increasing density around transit corridors, and allowing more ‘missing middle’-type housing are the local and state policy reforms likeliest to increase housing production,” Palim said. “However, most remain apprehensive about the near-term prospects of these sorts of reforms being enacted broadly enough to have a meaningful effect on supply and housing affordability.”

Terry Loebs, founder of Pulsenomics, which administered the survey, said despite robust home value growth in the first half of 2024, panelists anticipate a slowdown in price appreciation for the remainder of the year and beyond. “While lower interest rates could incentivize some homeowners to sell, the deep-rooted housing supply and affordability crises will likely persist, even with a more accommodative monetary policy,” he said.