Experts see easing price growth as listings increase
Home prices may continue to grow at a slower pace in the next two years as listings rise, according to a recent survey by Fannie Mae and Pulsenomics.
A panel of over 100 housing experts from Fannie’s Home Price Expectations Survey (HPES) projected national home price growth of 4.3% in 2024 and 3.2% in 2025.
Although the panel’s estimates for 2024 are more optimistic than previous estimates, they are lower for 2025 than last quarter's predictions.
Doug Duncan, Fannie Mae's senior vice president and chief economist, noted that while home price growth is slowing, rising mortgage rates continue to strain affordability for buyers.
“The rise in mortgage rates in 2024 and continued above-trend home price growth continue to strain home purchase affordability,” Duncan said.
The average 30-year fixed mortgage rate is anticipated to end 2024 at 6.6%, up from an earlier forecast of 5.9%.
The survey also found that the number of homes listed for sale has increased despite rising mortgage rates.
About 84% of respondents believe that homebuyer and home-seller sensitivity to the "lock-in effect" is diminishing, leading to more listings despite high mortgage rates.
Duncan explained, “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.”
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Terry Loebs, founder of Pulsenomics, commented on the broader implications for affordability: “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.”
A majority of the panel expects any loosening of the "lock-in effect" to result in either "somewhat" or "significant" deceleration in home price growth. "However, we believe the ongoing affordability challenges are likely to weigh on how quickly these new listings convert to actual sales," Duncan added.
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