From Seeking Alpha:
US home prices expected to fall further than previously forecast, Fannie Mae says
U.S. home prices are expected to slow further than previously forecast next year and in 2026, according to Fannie Mae’s (OTCQB:FNMA) latest Home Prices Expectations survey released Thursday.
According to the survey of 100 housing experts in the industry and academia for the current Q4, average home prices are expected to slow by 3.8% in 2025 and 3.6% in the following year. That’s up from the Q3 survey that showed deceleration of 3.1% and 3.3%, respectively.
The panelists, on average, expect existing home sales to stay “sluggish” for another year while new home sales will “trend slightly upward,” Fannie Mae said. Mortgage rates are expected to remain “elevated by but modestly decline” over the year to 6.3%, it added.
The average contract interest rate for a 30-year fixed-rate mortgage was 6.85% in the week ended November 29, the Mortgage Bankers Association said Wednesday.
Fanne Mae said Thursday around 80% of respondents expect home prices to decelerate due to ongoing high mortgage interest rates, rising housing inventory, and slowing wage growth.
“While home price growth is expected to ease next year, HPES panelists’ big-picture view for 2025 appears to be little changed compared to 2024, with most seeing another year of elevated mortgage rates and weak home sales,” said Fannie Mae Chief Economist Mark Palim. “We share our panelists’ view that home price growth is likely to decelerate next year, as the mix of continued elevated mortgage rates and the run-up in home prices of the past four years will likely continue to strain affordability and remain an impediment to many would-be homebuyers.”
Meanwhile, Fannie Mae said, the minority of respondents who are expecting home prices to appreciate to accelerate cited strong pent-up demand by first-time homebuyers, tightening inventory, and declining interest rates.