A recent Fannie Mae poll, conducted by Pulsenomics and comprising over 100 housing experts, suggests that if mortgage rates ease and inventory remains limited, home prices could see unexpectedly robust increases in 2024.
Just three months ago, this panel of experts foresaw a modest 2.4 percent rise in home prices for the year, followed by a slightly higher 2.7 percent in 2025. However, the latest Fannie Mae Home Price Expectations Survey, conducted by Pulsenomics between Jan. 29 and Feb. 9, reveals a more bullish sentiment. The experts now anticipate a 3.8 percent annual national home price appreciation in 2024 and a 3.4 percent growth in 2025.
This upgraded forecast for 2024, exceeding the December projection by 1.4 percentage points, is attributed primarily to the ongoing scarcity of available homes for sale and the trend of lower mortgage rates.
Of those surveyed, 41 percent believe their forecasts lean towards underestimating rather than overestimating future home price gains. Among them, a majority pointed to persistent housing supply constraints and declining mortgage rates as key factors.
While this outlook may bode well for current homeowners, potential buyers continue to face affordability concerns as rising home values and projected future prices persist. Terry Loebs, founder of Pulsenomics, emphasized this point, noting that the imbalance between supply and demand is likely to persist.
The poll, conducted quarterly since 2010, aims to project national home prices five years ahead, utilizing Fannie Mae’s Home Price Index as a reference.
Projections for 2024 vary significantly among experts. Gary Painter, a real estate professor at the University of Cincinnati Lindner School of Business, stands as the most optimistic, foreseeing a 9 percent appreciation in home prices. On the contrary, Stephen Malpezzi, a professor at the University of Wisconsin School of Business, projects a 7 percent decline.
Additionally, the Pulsenomics panel forecasts that 30-year fixed mortgage rates will drop to 6 percent by the end of 2024, aligning with predictions from economists at Fannie Mae and the Mortgage Bankers Association. Fannie Mae’s Vice President of Economics, Hamilton Fout, believes that if mortgage rates approach the panel’s median prediction, it could sustain continued home price growth, particularly amidst ongoing supply-side challenges in the housing market.
While mortgage rates have seen an uptick in February, recent inflation data suggests the possibility of rate decreases. Key metrics such as the personal consumption expenditures (PCE) price index indicate a gradual decline toward the Federal Reserve’s 2 percent inflation target. Moreover, the Institute for Supply Management’s Manufacturing PMI report indicates a continued contraction in the manufacturing sector, potentially paving the way for Federal Reserve adjustments to short-term rates without triggering inflation concerns.
