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Economists and colleagues are unlikely to reduce the mortgage interest rate this year, making many housing purchasers and those who want to sell them, and recovered from 2025 housing sales from the lowest level in 30 years. He states that the outlook is cooling.
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The forecasts announced this week by the Fanny Mei and the Mortgage Banking Association reflect the rise in long -term interest rates in the fourth quarter of 2024, which will continue this year.
Since the lowest 6.03 % in 2024 on September 17, mortgage interest rates have risen by 1 %, and investors in the bond market that have funded most mortgages, federal reserves. We are concerned that the policy officials of the association may not be able to suppress inflation yet.
According to the interest rate lock data tracked by Optimal Blue, the 30 -year fixed interest rate -based mortgage interest rate has exceeded 7 % since May 2024 this month.
Fanny Mei’s forecasts are currently expecting the mortgage interest rate to gradually decline, an average of 6.5 % by the fourth quarter of 2025 and 6.3 % by the fourth quarter of 2026. Last month, Fanny Mei’s economists anticipate interest rates at fixed interest rates for 30 years. The mortgage interest rate is expected to decrease to 6.2 % by the end of this year and 6.0 % next year.
Mark Palim
Fanny Mei’s chief economist, Mark Parim, said in a statement, “Although there are still signs of recovery in the labor market, the rising mortgage rates associated with economic growth have increased, and many housing purchases faced by many housing purchase candidates. It is likely that difficulties will continue in the future. ” “It is expected that existing housing sales will be sluggish this year due to the ongoing lock -in effect and affordable restrictions.”
Good news is that income is expected to rise earlier than housing prices and rent this year, making it easier to obtain new housing in many markets, and can set prices that are competitive with existing houses. He said.
“Otherwise, our forecasts that housing sales activities will continue to be limited, combined with an increase in interest rates, and the 2025 housing market is becoming very similar to 2024. I will reconfirm our views.
Fanny May expects the number of new and used houses to buy and sell this year to 4,887,000 units, and expects that it will be 119,000 less than 56,000 units expected to be sold last month.
Will the accommodation fee here increase?
Source: Forecast of Fanny Mei and Mortgage Bank Association.
The MBA’s expectations have been revised, and the prospects for lowering interest rates in time for the spring housing purchase season are even more pessimistic than Fanny May’s expectations.
Fanny Mei Economists believe that the interest rate of fixed interest rates for 30 years may decrease to 6.6 % in the second quarter of 2025, but the MBA is expected to be only 6.9 % in the second quarter. I’m doing it.
In response to the surprisingly strong employment statistics on January 10, investors are convinced that the Fed may not fall until June, and the Central Bank Policy officials may even decide to raise interest rates. The debate was caused.
Following the announcement of the “relatively good” CPI report, which ended the speculation that inflation would be forced to raise interest rates this year, the interest rate was the highest value of 2025 recorded on January 14. It dropped slightly from 7.05 %.
However, in the futures market tracked by the CME Fed Watch tool, investors expect the Fed to maintain interest rates at a meeting on January 29 and March 19, and the interest rate of May 7 is on May 7. The possibility was only about 50 %.
President Donald Trump said that high interest rates would have a negative effect on the economy and demanded the Fed a re -starting interest rate.
According to Reuters, Trump said on Thursday, “I think I know more about interest rates better than interest rates, and I definitely know better than the main responsible for making a decision.” He hinted about Jerome Powell, the Promotion System Board (Fed).
However, the Fed does not have the authority to directly manage long -term bond yields and mortgage interest rates determined by supply and investors. The Fed has reduced short -term interest rates at the meeting on September 18, November 7 and December 18, but the mortgage rates continued to rise.
Fanny Mei’s economist said in the latest prospects, “Despite the continuation of short -term interest rates at the December meeting, long -term interest rates have risen in recent months.” “This divergence reflects that the bond market has reset prices based on the latest forecasts, depending on the future economic indicators and other data, based on the latest forecast for the next few years.
Fanny Mei’s economists have now expected that the Fed will lower the short -term Federal fund interest rate by 25 Basis points in June and September, and then remain unchanged.
“Fanny Mei’s forecast has withdrawn the two -time expectations in 2026 in consideration of changes in the risk of Fed in the past month, increased interest rates, and risks for solid growth.” Was stated.
It is expected that the rise in housing prices will slow down
Source: Fanny Mei prediction, January 2025.
With the rise in mortgage rates, many sellers are reluctant to put their homes on the market because they do not want to abandon the low interest rates of existing mortgages.
As a result, in many markets, stocks are lacking, reducing the recoil of housing prices that have soared during pandemics.
Fanny Mei’s economists expect the US housing prices to rise 5.8 % in 2024 and to rise 3.5 % in 2025, but this is one -quarter lower than expected in October.
Fanny Mei predictors expect the annual housing price increase to 1.7 % by the fourth quarter of 2026.
Modified sales recovery forecast in 2025
Source: Fanny Mei prediction, January 2025.
Following the decrease of two digits in 2022 and 2023, it is expected that used housing sales will decrease by about 1 % in 2024 to 4,058,000 units since 1995.
Mortgage interest rates and housing prices are expected to be high in 2025, and Fanny May’s sales of 2 % of this year’s second -hand housing will increase to 4.15 million units, with a significant growth of 8 % in 2026. We expect 4.5 million units.
Therefore, the company has revised the total housing sales forecast in 2025 to 4.89 million units (past 5 million units) and 5.25 million units in 2026 (past 5.47 million).
According to RealTor.com data, the stock of selling housing has increased by 31 % in December 2024, which should contribute to sales.
“Increase in stock is not due to the increase in the new listing pace in the past year, but rather an increase in time to sell houses.” “This means that in some areas, the group of potential buyers on the side job is shrinking, especially in the current price and mortgage interest rates that there is no sufficient purchase demand from the first buyer. We interpret it. “
Fanny Mayi forecasts are located in San Belt and other metropolitan areas where the construction of new housing has been actively built in recent years, and sales are strong in these areas. He pointed out that housing prices are likely to slow down.
I can’t expect an architectural boom this year
Source: Fanny Mei prediction, January 2025.
Housing analysts believe that the increase in housing is an important factor in solving an affordable price problem, but Fanny May has built about 1 million units of new detached houses this year and next year. I think it will stay flat.
This year, both detached houses and apartment houses are expected to shrink, and the total number of housing construction units will decrease by 3 % to 1,312,000 units from 2024.
With the rise in mortgage rates, the sales pace has slowed down, and the construction company is focusing on the already completed housing sales.
“In the past half a year, many of the listed housing builders have reported significant decline in operating margins,” said Fanny Mei’s economists. “There is a limit to the willingness of housing builders to acquire and other concessions, but major construction companies emphasize their efforts to achieve sales and delivery targets and their attitude to actively use deeper concessions. We continue to provide positive guidance. “
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