What’s Next for Home Prices and Mortgage Rates?

What’s Next for Home Prices and Mortgage Rates?

If you're considering a move this year, you're likely focused on two key aspects of the housing market: home prices and mortgage rates. You may be pondering what the future holds and whether it's advantageous to move now or wait.

The best approach is to make the most informed decision possible using the latest data. Here’s a summary of what experts are currently saying about both prices and rates.

1. What’s Next for Home Prices?

A dependable source for insights into future home prices is the Home Price Expectations Survey from Fannie Mae, which gathers opinions from over a hundred economists, real estate experts, and investment and market strategists.

The latest survey results suggest that experts anticipate home prices will continue to rise through at least 2028 (refer to the graph below):

Although the rate of appreciation may fluctuate annually, the survey indicates that we can expect to see home prices rise—not fall—over the next five years, albeit at a more moderate pace.

What does this mean for your decision to move? If you purchase a home now, it is likely to increase in value, allowing you to build equity in the coming years. However, if these forecasts hold true and you decide to wait, you may face higher home prices in the future. This could mean paying more later if you postpone your buying decision.

2. When Will Mortgage Rates Come Down?

This is the million-dollar question in the industry, and there's no straightforward answer to it. The complexity arises from the various factors contributing to the current volatile mortgage rate environment. Odeta Kushi, Deputy Chief Economist at First American, sheds light on this topic:

“Every month brings a new set of inflation and labor data that can influence the direction of mortgage rates. Ongoing inflation deceleration, a slowing economy and even geopolitical uncertainty can contribute to lower mortgage rates. On the other hand, data that signals upside risk to inflation may result in higher rates.”

What happens next will depend on where each of those factors goes from here. Experts are optimistic rates should still come down later this year, but acknowledge changing economic indicators will continue to have an impact. As a CNET article says:

“Though mortgage rates could still go down later in the year, housing market predictions change regularly in response to economic data, geopolitical events and more.”

If you're ready, willing, and financially prepared to buy a home right now, it's wise to collaborate with a trusted real estate advisor. They can help you assess your options and determine the best course of action for your situation.

Bottom Line

Let's connect to ensure you have the most current information on home prices and mortgage rate expectations. Together, we'll review what the experts are saying, helping you make a well-informed decision about your move.