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The surprising strength of the U.S. economy has quelled fears of a recession — but also means home prices are likely to keep rising and mortgage rates may not come down as quickly as previously expected, Fannie Mae economists said Thursday.
Last month, Fannie Mae economists were predicting this year might end up being the slowest year for home sales since 1995, as would-be homebuyers continued to grapple with affordability issues.
Recent declines in mortgage rates and the prospect that rates will fall below 6 percent next year have prompted forecasters at the mortgage giant to bump up their projections for 2024 and 2025 home sales — but only by a hair.
Home sales projected to grow 10% in 2025
Source: Fannie Mae housing forecast, October 2024.
Fannie Mae’s October housing forecast predicts 2024 home sales will total 4.77 million, up 30,000 units from September’s forecast of 4.74 million sales. If the latest forecast pans out, this year’s sales will surpass 2023 by 16,000 units — and last year will stay in the history books as the slowest year of the century.
Mark Palim
“While potential homebuyers have noticed the decline in mortgage rates over the last few months, they are equally aware that there has been little relief on the home price side, the other primary driver of unaffordability, particularly for first-time buyers,” Fannie Mae Chief Economist Mark Palim said in a statement.
“The timing of the long-expected pick-up in home sales activity, as well as a further moderation in home price appreciation, will depend in part on the willingness of current homeowners to relinquish their low mortgage rates by offering their homes for…