Anticipated Trends in Real Estate Over the Next Four Years
The latest Fannie Mae Home Price Expectations Survey (HPES) projects a moderated but steady rise in home prices from 2025 through 2029. The consensus among over 100 housing experts is that annual home price growth will average around 2.8% to 3.4% in the near term, with a cumulative increase approaching 20% by the end of 2029.
This forecast contrasts with the larger double-digit annual gains seen in recent years, reflecting a shift towards more sustainable, moderate growth. The market is expected to continue facing supply constraints, keeping prices rising but at a slower, healthier pace.
Home prices are projected to climb steadily, averaging a cumulative gain of nearly 20% across the U.S. between the start of 2025 and the end of 2029. Optimistic projections see growth up to 5% annually, while even pessimistic views expect positive growth around 1.3% annually.
Mortgage rates are anticipated to gradually decline, ending 2025 around 6.4% and 2026 near 6.0%, which may support housing demand but continue to cap rapid price increases. Total home sales are expected to be approximately 4.85 million in 2025 and 5.35 million in 2026 according to Fannie Mae's updated outlook.
Inventory levels are a concern, with experts questioning if the "lock-in effect" (homeowners reluctant to sell and give up low mortgage rates) will continue to severely restrict supply or if more homes will come onto the market. The housing supply shortage will remain a key challenge, continuing to affect affordability and competition in the market.
The forecast suggests that while this slowdown might be welcome news for buyers hoping for less competition, it also means prices are expected to keep climbing, maintaining pressure on affordability. The affordability crisis is a factor contributing to uncertainty, with experts discussing how much longer prices can rise before affordability constraints put a serious brake on demand.
Economic outlook is another factor of uncertainty, with experts debating whether we will achieve a soft landing, face a mild recession, or see stronger-than-expected growth. The predicted growth for 2025-2029 is significantly slower than the recent Covid boom (9.5%) and even slower than the bubble years (7.7%). However, it's comfortably above the bust period (-4.8%).
Overall, the HPES data indicates that from 2025 through 2029, home prices are projected to grow steadily but without the volatile spikes of the recent past, implying a mature housing market environment that balances ongoing demand with tighter affordability conditions.
- The real estate market is expected to see moderate, steady growth in home prices from 2025 to 2029, as per the Fannie Mae Home Price Expectations Survey (HPES).
- This forecast suggests a shift away from the large, double-digit annual gains seen in recent years, towards more sustainable, moderate growth.
- Experts anticipate an annual home price growth of around 2.8% to 3.4%, with a cumulative increase approaching 20% by the end of 2029.
- Mortgage rates are anticipated to decline gradually, potentially supporting housing demand while also capping rapid price increases.
- Inventory levels remain a concern, with experts questioning if the "lock-in effect" will persist, severely restricting supply or if more homes will come onto the market.
- The affordability crisis is a factor contributing to uncertainty, with experts debating how much longer prices can rise before affordability constraints put a serious brake on demand, impacting the overall business environment and investment in the housing-market.
