The housing market is witnessing a renewed sense of optimism as the Fannie Mae Home Price Expectations Survey (HPES) for the first quarter of 2024 unveils an upgraded forecast for home price growth. A panel of housing experts anticipates a stronger annual increase in national home prices, with projections of 3.8% for 2024 and 3.4% for 2025. This marks a significant upward revision from the previous quarter's expectations of 2.4% for 2024 and 2.7% for 2025.
What's Driving the Optimism?
A notable shift in sentiment is evident among the experts, with 41% in Q1 2024, up from 26% in Q4 2023, indicating higher upside risk to their home price forecasts. The primary factors fueling this optimism are ongoing housing supply constraints and the anticipation of lower mortgage rates. The majority of the panel points to these elements as the basis for their upward revisions.
Mortgage Rate Expectations
The experts foresee a median 30-year fixed mortgage rate of 6% by the end of 2024. This expectation plays a crucial role in shaping the outlook for the housing market, as lower mortgage rates can make home buying more accessible and stimulate demand.
Market Insights
Hamilton Fout, Fannie Mae's Vice President of Economics, highlights the potential for continued home price growth if mortgage rates move towards the predicted median rate of six percent by year-end, given the persistent supply-side challenges. Terry Loebs, founder of Pulsenomics, echoes this sentiment, emphasizing the positive outlook for existing homeowners. However, he also notes the enduring affordability concerns for prospective buyers amid a scarcity of listings.
About the HPES Survey
The HPES, conducted in partnership with Pulsenomics, LLC, polls over 100 housing experts for forecasts of national home price changes over the next five years, using the Fannie Mae Home Price Index as the benchmark. The Q1 2024 HPES had 114 respondents and was conducted between January 29, 2024, and February 9, 2024.
In conclusion, the upgraded outlook for home price growth in the Fannie Mae HPES reflects a cautiously optimistic view of the housing market, driven by supply constraints and the expectation of lower mortgage rates. While this is welcome news for homeowners, the market's dynamics continue to pose challenges for those aspiring to buy a home.