WASHINGTON—Following home price growth of 6.0% in 2023, a panel of housing experts is forecasting annual national home price growth of 4.7% in 2024 and 3.1% in 2025, according to the Q3 2024 Fannie Mae Home Price Expectations Survey (HPES), produced in partnership with Pulsenomics, LLC.
The HPES polls over 100 experts across the housing and mortgage industry and academia for forecasts of national home price percentage changes in each of the coming five calendar years, as measured by the Fannie Mae Home Price Index (FNM-HPI). The panel’s latest estimates of national home price growth are higher than last quarter’s expectations of 4.3% for 2024 but lower than the previous quarter’s expectations of 3.2% for 2025, Fannie Mae said.
“This quarter, the ESR Group also surveyed panelists on the impact of potential zoning and permitting reforms at state and local levels to increase construction of new homes and, thereby, the supply of homes available to buyers and renters,” Fannie Mae said. “While most panelists believe that reforms implemented to date are likely to have a positive effect on new construction within the next five years, they were generally split on whether that effect would be ‘moderate’ or ‘insignificant’.”
What Panelists Also Say
According to Fannie Mae, a plurality of panelists suggested that hastening the construction permitting process would have the greatest positive impact on housing supply if broadly enacted, following by expanding zoning for multifamily housing developments and enabling more “missing middle” or “light touch density” housing construction. However, noted Fannie Mae, 63% of panelists are “not confident at all” that the initiatives they think would be most effective will be enacted widely within the next five years.
“Recent measures of home price growth, including our own, have continued to come in stronger than previously expected, as reflected by the 100-plus HPES panelists who, on average, once again modestly upgraded their home price outlook for 2024,” Mark Palim, Fannie Mae vice president and deputy chief economist, said in a statement. “Strong home price appreciation has persisted despite purchase affordability remaining stretched for the vast majority of consumers, a dynamic that is still primarily a function of inadequate supply. Our panelists overwhelmingly agreed that there is a fundamental lack of housing in the United States relative to underlying demographic factors – and, on average, believe the nation to be short approximately 2.8 million homes.
Remaining ‘Apprehensive’
“We’ve previously estimated the shortfall to be more than four million,” continued Palim. “The panelists also shared that they think speeding up construction permitting processes, increasing density around transit corridors, and allowing more ‘missing middle’-type housing are the local and state policy reforms likeliest to increase housing production. However, most remain apprehensive about the near-term prospects of these sorts of reforms being enacted broadly enough to have a meaningful effect on supply and housing affordability.”
Complete results of the Q3 2024 HPES can be found here.