Real Estate

U.S. home prices will rise a bit faster this year than previously expected due to limited available supply, according to analysts polled by Reuters, who saw affordable properties coming to market remaining below levels of demand in coming years, Reuters reported. Interest-rate sensitive house prices, which surged 45% during the pandemic, have risen around 8% since early 2023, wiping out a 5% dip in the second half of 2022, caused in part by the 525 basis points of rate rises from the U.S. Federal Reserve. Despite elevated mortgage rates — and expectations among forecasters that the first cut will come in September at the earliest, and priced for November by markets — home prices were expected to continue their upward march. Average prices defied predictions of a decline last year, rising nearly 6%, and are expected to increase another 5% in 2024, according to the median of forecasts from 28 analysts in a Reuters poll. Forecasts were based on the S&P CoreLogic Case-Shiller composite index of 20 metropolitan areas. That was an upgrade from 3.3% predicted three months ago and higher than the average consumer price inflation forecast for this year of 3.2% in a separate Reuters survey, but home price rises are expected to slow to 3.3% in 2025 and 3.4% in 2026, the latest survey showed, despite more than 200 basis points of interest-rate cuts expected by then. Mortgage rates are forecast to dip a little more than a full percentage point from the current 7% but to stay well above the rates many existing homeowners pay on standard 30-year deals.