Written by: Internal Analysis & Opinion Writers
U.S. home price growth is expected to moderate over the next two years, according to a new expert panel survey conducted by Fannie Mae and Pulsenomics. Economists forecast average annual increases of 2.9% in 2025 and 2.8% in 2026—marking a downward revision from earlier expectations of 3.4% and 3.3%, respectively.
The most recent data from the Fannie Mae National Home Price Index showed that prices rose 5.2% year-over-year during the first quarter of 2025. While still elevated, that growth rate indicates a cooling trend compared to the more aggressive gains recorded in previous years.
The panel surveyed 107 economists, housing strategists, and market analysts between May 8 and May 20. Individual forecasts varied significantly. On the high end, some participants predicted a 6.5% increase in home prices in 2025, while the most pessimistic outlook called for a 4.3% decline. For 2026, projections ranged from a 7.4% gain to a 7.2% drop, underscoring the market’s uncertainty and regional variability.
Experts also weighed in on geographic trends. Markets such as Boston, New York, and Philadelphia are expected to experience stronger price appreciation compared to the national average. Meanwhile, cities like Tampa, Austin, and Dallas are projected to underperform, reflecting potential corrections in regions that saw rapid pandemic-era growth.
The latest projections represent a continuing recalibration of expectations. Earlier forecasts called for 3.8% growth in 2025, but those estimates have been steadily revised downward in recent quarters as price momentum slows and affordability challenges weigh on demand.
Economists point to several reasons for the expected slowdown. Elevated mortgage rates, which remain near multi-decade highs, are dampening buyer enthusiasm and limiting purchasing power. At the same time, home prices remain historically high in many markets, further stretching affordability.
Housing supply constraints are also playing a role. While new construction has picked up in certain regions, inventory remains tight nationally. This shortage is helping support prices but also contributing to slower transaction volume and buyer fatigue.
Another factor influencing the outlook is the broader economic landscape. While inflation has eased from its peak, it remains sticky in areas like shelter and services. The Federal Reserve’s cautious stance on interest rates has reinforced expectations that borrowing costs will remain elevated through the end of the year, putting additional pressure on housing affordability.
Still, not all the news is bearish. Analysts note that a slowing pace of home price growth does not equate to a decline in values. Instead, the data suggest that the housing market may be entering a more stable, sustainable phase following the explosive growth of the past several years.
In this environment, buyers may have more room to negotiate, and sellers may need to adjust expectations. The shift toward moderation could benefit first-time buyers and those who previously struggled to compete in overheated markets.
For policymakers and industry leaders, the updated projections highlight the importance of balancing housing supply, affordability, and lending access. Continued investment in affordable housing development, zoning reform, and down payment assistance could help offset the headwinds posed by elevated rates and stagnant wage growth.
Ultimately, while home prices are still expected to rise, the days of double-digit annual gains appear to be over—at least for now. The market’s transition to slower growth may offer both challenges and opportunities, depending on where and how buyers and sellers engage in the months ahead.
