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Home prices could see surprisingly strong gains in 2024 if mortgage rates fall and inventory remains scarce, according to a Pulsenomics Fannie Mae poll of more than 100 housing experts.
Three months ago, the Pulsenomics group of real estate industry and academic experts predicted that house prices would rise 2.4% this year and 2.7% in 2025.
Newest Fannie Mae Home Price Expectations Survey Pulsenomics’ HPES survey, conducted between January 29 and February 9, shows the group expects national home prices to rise 3.8% this year and 3.4% in 2025.
The council’s latest forecast for house price appreciation in 2024 is 1.4 percentage points higher than expected December forecasta lack of homes for sale and lower mortgage rates appear to be the main drivers.
Forty-one percent of respondents said their forecasts were more likely to underestimate future house price growth than overestimate it, with the majority citing ongoing housing supply constraints and lower mortgage rates as reasons.
“This is a positive outlook for those who already own homes, but potential homebuyers are concerned about affordability as a shortage of housing drives up current and expected future prices,” Pulsenomics founder Terry Loebs said in a report. concerns are unlikely to disappear anytime soon.”
The poll, conducted quarterly by Pulsenomics since 2010, attempts to predict national home prices over the next five years, using Fannie Mae’s home price index as a benchmark.
Fannie Mae Home Price Expectations Survey
Source: Fannie Mae house price expectations survey Conducted by Pulsenomics.
The gap between the most optimistic and pessimistic forecasts is wide, especially when looking out five years.
Among the 114 experts who participated in the latest poll, Gary Painter, a real estate professor at the University of Cincinnati’s Lindner School of Business, is the most optimistic, predicting that home prices will rise 9% in 2024.
On the other hand, Stephen Malpezzi, a professor at the James A. Graaskamp Center for Real Estate at the University of Wisconsin-Business School, expects home prices to fall 7%.
Mortgage rates expected to drop to 6% this year
Source: Fannie Mae house price expectations survey Conducted by Pulsenomics.
The Pulsenomics team also expects 30-year fixed mortgage rates to fall to 6% by the end of 2024, in line with the latest forecasts from economists at Fannie Mae and the Mortgage Bankers Association.
“If mortgage rates reach the panel’s midpoint forecast of 6% by the end of 2024, we expect this to support continued home price growth, especially given the ongoing supply-side challenges facing the housing market,” said Fannie Mae Vice Chair of Economics. Hamilton Ford said in a statement.
While mortgage rates have been rising in February, the latest inflation data may give mortgage rates some room to fall.
A key inflation indicator released by Federal Reserve policymakers on Thursday, the personal consumption expenditures (PCE) price index, continued to fall in January and is close to the Federal Reserve’s 2% inflation target.
The Institute for Supply Management’s manufacturing purchasing managers’ index released on Friday showed that manufacturing contracted for the 16th consecutive month in February, providing further evidence that the Federal Reserve can cut short-term interest rates without exacerbating inflation.
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