US Home Prices Expected to Increase by 5% This Year, Followed by More Moderate Growth in the Future: Reuters Poll

U.S. Home Prices Expected to Rise Faster Due to Limited Supply

Analysts predict that U.S. home prices will increase at a faster rate this year than previously expected, driven by a shortage of available supply. Despite the recent surge in interest-rate sensitive house prices, which rose 8% since early 2023, experts believe that affordable properties coming to the market will continue to fall short of demand in the coming years.

The median forecast from 28 analysts in a Reuters poll suggests that home prices are expected to rise by 5% in 2024, following a 6% increase last year. This projection is higher than the average consumer price inflation forecast for the same period.

While mortgage rates are expected to dip slightly from the current 7%, they are forecasted to remain high compared to historical levels. This could impact the pace of supply of affordable homes, with 92% of analysts predicting that demand will outstrip supply over the next two to three years.

Despite a recent increase in housing inventory, which rose to 1.21 million units last month, experts believe that it is still insufficient to meet the demand for homes in the U.S. market. Existing home sales are expected to reach a 4.3 million unit annualized rate by the end of the year, significantly lower than the levels seen during the pandemic.

Overall, the housing market is facing challenges due to limited supply and high mortgage rates, which could impact affordability for potential homebuyers in the near future.