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Home prices could post surprisingly strong gains in 2024 if mortgage rates ease and inventory remains scarce, according to a Fannie Mae poll of more than 100 housing experts conducted by Pulsenomics.
Three months ago, the Pulsenomics panel of housing industry and academic experts was predicting 2.4 percent home price appreciation this year, followed by 2.7 percent gains in 2025.
The latest Fannie Mae Home Price Expectations Survey (HPES), conducted between Jan. 29 and Feb. 9 by Pulsenomics, found the panel expecting 3.8 percent annual national home price appreciation this year and 3.4 percent growth in 2025.
The panel’s latest forecast for 2024 home price appreciation is 1.4 percentage points greater than the December forecast, and the lack of homes for sale and lower mortgage rates appear to be the main drivers.
Among the 41 percent who said their forecasts were more likely to underestimate future home price gains rather than overestimate them, a majority cited ongoing housing supply constraints and lower mortgage rates as the reason.
“This is a positive outlook for those who already own a home, but as the dearth of listings boosts both prevailing values and expected future prices, the affordability concerns of prospective homebuyers are unlikely to fade soon,” Pulsenomics founder Terry Loebs said, in a statement.
The poll, conducted quarterly by Pulsenomics since 2010, attempts to forecast national home prices five years into the future using Fannie Mae’s Home Price Index as a benchmark.
Fannie Mae Home Price Expectations Survey
Source: Fannie Mae Home Price Expectations Survey conducted by Pulsenomics.
The range between the most optimistic and pessimistic projections is considerable, especially when looking five years out.
Among the 114 experts who weighed in for the latest poll, Gary Painter, a professor of real estate at the University of Cincinnati Lindner School of Business, was the most optimistic, predicting home prices will appreciate by 9 percent in 2024.
At the other end of the spectrum, Stephen Malpezzi, a professor at the University of Wisconsin School of Business’ James A. Graaskamp Center for Real Estate, projected home prices will fall by 7 percent.
Mortgage rates projected to fall to 6% this year
Source: Fannie Mae Home Price Expectations Survey conducted by Pulsenomics.
The Pulsenomics panel also projects 30-year fixed mortgage rates will fall to 6 percent by the end of 2024, in line with the latest forecasts by economists at Fannie Mae and the Mortgage Bankers Association.
“If mortgage rates move toward the panel-predicted 6 percent median rate by the end of 2024, we would expect this to be supportive of continued home price growth, particularly given the persistent supply-side challenges facing the housing market,” Fannie Mae Vice President of Economics Hamilton Fout said in a statement.
While mortgage rates have been on the rise in February, the latest inflation data could give mortgage rates some room to fall.
A key inflation metric for Federal Reserve policymakers released Thursday, the personal consumption expenditures (PCE) price index, continued to drop in January toward the Fed’s 2 percent inflation target.
Friday’s release of the Institute for Supply Management’s Manufacturing PMI showed the manufacturing sector contracted in February for the 16th consecutive month, adding to the case that the Federal Reserve can cut short-term rates without fueling inflation.
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