Home prices are projected to increase in each of the next two years, according to forecasts from a panel of housing experts by Fannie Mae. The group anticipates 2.4% national home price growth in 2024 and 2.7% growth in 2025, according to the Q4 2023 Fannie Mae Home Price Expectations Survey.
The survey polls over 100 experts across the housing and mortgage industry and academia for forecasts of national home price changes in each of the coming five calendar years. The panel anticipates 5.9% national home price growth for 2023.
“The survey panelists expect home price growth to decelerate in the coming years, following 2023 price growth that proved more resilient than many anticipated,” says Doug Duncan, Fannie Mae senior vice president and chief economist. “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.”
The survey also polled respondents on expectations for mortgage rates in the long run as well as their opinions on potential drivers of rates in the future. The average respondent expects the 30-year fixed rate mortgage to settle at an average of approximately 5.7%.
“Panelists expect future rates to decline meaningfully from the recent highs of 8%,” says Duncan. “This would obviously provide improved affordability for potential home buyers, although anyone expecting the return of the extremely low-rate environment from 2020 to 2022 will likely be disappointed.”
According to the panelists, expanding federal fiscal deficits, “retrenching globalization,” and the green energy transition are expected to provide upward pressure on long-term interest rates. Over one-third of those surveyed anticipate the aging population and the evolution of artificial intelligence will exert modest downward pressure on long-term interest rates.
