Homebuyers may find relief in slower price growth
Annual home price growth has proved more resilient than anticipated, but a panel of housing experts does not foresee this momentum carrying over into 2024.
Following a strong 5.9% growth rate in 2023, Fannie Mae’s recent survey involving over 100 housing and mortgage experts forecasted home prices to decelerate to 2.4% in 2024 and 2.7% in 2025.
Terry Loebs, founder of Pulsenomics, said the 2023 home price growth trend – jumping from 3.3% in the 2022 survey to the current 5.9% – is unlikely to continue in 2024.
“[This is] an encouraging consensus for aspiring homebuyers as we approach the new year,” Loebs added.
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Amid recent fluctuations in mortgage rates, the survey also sought opinions on long-term interest rate expectations. On average, experts forecast the 30-year fixed-rate mortgage to stabilize around 5.7%.
Fannie Mae chief economist Doug Duncan shared insights on the survey’s findings: “Some, including us, had expected the rapid and significant rise in mortgage rates in 2023 to have dampened purchase demand further than it has, putting more downward pressure on home prices this past year than what appears to have occurred.”
“Looking beyond the recent volatility in mortgage rates, panelists expect future rates to decline meaningfully from the recent highs of 8%. This would obviously provide improved affordability for potential homebuyers, although anyone expecting the return of the extremely low-rate environment from 2020 to 2022 will likely be disappointed. The panelists also revealed that they anticipate other factors will impact long-term interest rates, including demographic trends, expanding fiscal deficits, the evolution of artificial intelligence, and the green energy transition.”
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