Although home price growth was stronger than expected during the second quarter, prices are likely to moderate and close out 2024 and 2025 at annual rates of 6.1% and 3.0%, respectively, according to the July 2024 commentary from the Fannie Mae (OTCQB:FNMA) Economic and Strategic Research Group.
Fannie Mae noted a more than 30% year-over-year increase in listings of homes, which could level out the supply-and-demand imbalance that burdened the housing market. In many large Sunbelt metros, inventory levels match or even exceed for-sale inventories in pre-pandemic 2019.
“The housing market continues to wait for affordability to improve, even as the supply of new and existing homes for sale slowly rises,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “The slight decline in mortgage rates of late, following data pointing to gradually slowing economic growth, has not been enough to overcome the significant affordability constraints imposed on would-be homebuyers. As such, despite more homes being listed for sale, actual home sales have not picked up.”
Duncan added that despite the inventory uptick in the Sunbelt metros, “supply in much of the Northeast and Midwest remains extremely tight. In aggregate, we expect these varied market conditions to lead to a slight decline in total new home sales nationally for the full-year 2024, but a slight increase in existing homes sales.”
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