Fannie Mae’s five predictions for 2025

Plus: Builder confidence holds steady in December

December 18, 2024

👋 Happy Wednesday! Beware of meetings that could have been an email. Today’s newsletter is 770 words, a 2.5-minute read. Let’s dive in…

Disclaimer: Average mortgage rates as of Dec 17, 2024. © MND Daily Rate Index.

1. Fannie Mae’s five predictions for 2025

According to Fannie Mae’s 2025 forecast, the housing market will continue to face challenges from 2024, including affordability issues and high mortgage rates. The report outlines five key predictions that will shape the market, offering insight into home sales, price trends, and new construction in the coming year.

  1. Mortgage Rates: Rates will stay above 6%, with inflation and job market stability preventing significant rate cuts.

  2. Economic Growth: The economy and employment will decelerate modestly. Inflation will ease but remain above the Federal Reserve’s 2% target until 2026.

  3. Existing-Home Sales: Sales will improve slightly to 4.25 million but remain near 30-year lows due to affordability issues and the lock-in effect, where homeowners keep low-rate mortgages.

  4. New-Home Sales: Limited existing inventory and strong demand will keep new-home sales robust, with the South and Mountain West dominating new-home sales thanks to favorable land availability and zoning.

  5. Home Prices and Rent: Home price growth will slow to 3.6%, improving affordability. Multifamily rent growth will remain modest at 2%-2.5%, with construction activity tapering off.

2. Builder confidence holds steady in December

The National Association of Home Builders (NAHB) reported the housing market index (HMI) was at 46, unchanged from 46 last month. Any number below 50 indicates that more builders view sales conditions as poor than good.

The latest HMI survey also revealed that 31% of builders cut home prices in December. Meanwhile, the average price reduction was 5% in December, the same rate as in November. The use of sales incentives was 60% in December, also unchanged.

“While builders are expressing concerns that high interest rates, elevated construction costs and a lack of buildable lots continue to act as headwinds, they are also anticipating future regulatory relief in the aftermath of the election. This is reflected in the fact that future sales expectations have increased to a nearly three-year high.”

NAHB Chairman Carl Harris

A MESSAGE FROM MORTGAGE NUGGETS

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3. More Nuggets

👍 Ben Carson endorses Scott Turner as ‘perfect pick’ for HUD secretary. (Facebook)

⏹️ FTC bans hidden junk fees in short-term lodging. (TechCrunch)

👋 Title Resources Group (TRG) conducts layoffs focused on Doma employees. (TLO)

🏡 CFPB finally issues PACE loan rules. (CFPB)

🫡 AI won’t handle your million-dollar mortgage anytime soon. (MPA)

4. 36% of Americans want the housing market to crash

According to a recent LendingTree survey, many Americans are concerned about a potential housing market crash, with 38% believing it’s likely to happen within the next year. Interestingly, 36% of respondents actually hope for a crash, seeing it as a way to achieve stability or make homeownership more affordable.

Here are the key findings from the survey:

  • 38% of Americans think a housing crash is likely, down from 44% last year.

  • 36% want a crash to occur, hoping it will lead to stability, lower property taxes, or affordable homebuying.

  • 29% of renters believe a crash is their only route to homeownership.

  • 46% of homeowners are reluctant to sell due to low mortgage rates.

  • 37% of Americans think mortgage rates will never return to 2020-2021 lows.

5. Suns owner Mat Ishiba making a run at buying Twins

Mat Ishbia, CEO of UWM, and his brother, Justin Ishbia, founder of private equity firm, Shore Capital Partners, are reportedly interested in buying the Minnesota Twins from the Pohlad family, who purchased the team in 1984 for $44 million.

In October, the Pohlad family, which has owned the Twins for four decades, announced its intention to explore selling the team.

The Ishbia brothers have been on this kind of shopping spree before, purchasing the NBA’s Phoenix Suns in 2022 and WNBA’s Phoenix Mercury in 2023. The pair have a combined estimated net worth exceeding $15 billion.

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☀️ You’re all caught up. See you on Friday!

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