Freddie Mac has recently revised its forecast for U.S. home prices, predicting a minimal increase of only 0.5% in both 2024 and 2025. This downgrade marks a significant shift from previous forecasts of 2.5% and 2.1%, highlighting the challenges facing the housing market.
The housing market outlook has been negatively impacted by higher mortgage rates and limited inventory, making it increasingly difficult for prospective buyers to enter the market. The Federal Reserve’s decision to abstain from rate cuts has resulted in higher bond yields and mortgage rates, with the 30-year fixed-rate mortgage recently surpassing 7%.
Freddie Mac has adjusted its forecast to reflect the current economic climate, removing previous predictions of Fed rate cuts and lower mortgage rates. Instead, the latest forecast anticipates that rates will remain elevated for a longer period. This adjustment comes as Redfin CEO Glenn Kelman describes the current housing market situation as the “worst” he has seen, pointing to high home prices and mortgage rates as major barriers preventing many Americans from purchasing homes.
With uncertainty looming over the housing market, prospective buyers may face difficulties in securing affordable financing and finding available homes. The combination of higher mortgage rates, limited inventory, and escalating prices paints a challenging picture for those looking to enter the housing market in the coming years. Stay tuned as developments unfold in the ever-evolving landscape of the U.S. real estate market.
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