The U.S. housing market will experience a 3.5% price increase during this year despite ongoing tariff challenges and persistent high mortgage interest rates according to property analyst predictions.
The analysts initially predicted better market conditions because they expected Fed rate cuts to boost demand and enhance affordability. The comprehensive tax-and-spending bill passed by Congress creates challenges for the market by increasing bond yields and restricting mortgage rate decreases.
The housing market will experience limited affordability throughout the next four years according to James Egan who serves as Morgan Stanley’s housing strategist. The forecast indicates that 30-year mortgage rates will decrease to 6.73% during this year.
The Case-Shiller index for major metropolitan areas will experience a 3.5% annual growth rate until 2027 which represents the lowest increase since 2011. The current housing market shows prices exceeding pre-pandemic levels by more than 50%.
Analysts predict two Fed rate reductions this year but they emphasize that substantial rate decreases are necessary to boost homebuying activity. According to Lawrence Yun who serves as chief economist at the National Association of Realtors a 50 to 100 basis point decrease in mortgage rates would function as the market catalyst.
