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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 70 February 2025 J O U R N A L • Home Price Expectations: The percentage of respondents who say home prices will go up in the next 12 months remained unchanged since the previous month at 38%, while the percentage who say home prices will go down increased from 25% to 27%. The share who thinks home prices will stay the same decreased from 36% to 35%. As a result, the net share of those who say home prices will go up in the next 12 months decreased by one percentage point MoM to 11%. • Mortgage Rate Expectations: The percentage of respondents who say mortgage rates will go down in the next 12 months decreased from 45% to 42%, while the percentage who expect mortgage rates to go up remained unchanged since the pre- vious month at 25%. The share who think mortgage rates will stay the same increased from 29% to 32%. As a result, the net share of those who say mortgage rates will go down over the next 12 months decreased 4 percentage points MoM to 16%. • Job Loss Concern: The percentage of employed respondents who say they are not concerned about losing their job in the next 12 months de- creased from 78% to 77%, while the percentage who say they are con- cerned increased from 20% to 22%. As a result, the net share of those who say they are not concerned about losing their job decreased 4 percentage points MoM to 54%. • Household Income: The percent- age of respondents who say their household income is significantly higher than it was 12 months ago increased from 16% to 17%, while the percentage who say their house- hold income is significantly lower decreased from 12% to 11%. The percentage who say their household income is about the same decreased from 71% to 70%. As a result, the net share of those who say their house- hold income is significantly higher than it was 12 months ago increased 1 percentage point MoM to 6%. "As noted in our recently published predictions-for-2025 forecast commen- tary, we expect a modest decline in mortgage rates, decelerating home price growth, and higher wage growth to improve the relative affordability of pur- chasing a home in the new year, though consumers' experiences will likely differ depending on where they live. As such, we think home purchase opportunities will still require market savviness by would-be homebuyers in what is expect- ed to remain, broadly speaking, a highly competitive housing market." Q4 HOME PRICE GROWTH ADVANCES AS RATES REBOUND T he most recent reading of the Fannie Mae Home Price Index (FNM-HPI) showed that single-family home prices climbed 5.8% from Q4 2023 to Q4 2024, accelerating from the downwardly revised annual growth rate of 5.4% in the previous quar- ter. The average quarterly price change for all single-family homes in the United States—excluding condos—is measured by the FNM-HPI, a national repeat-trans- action home price index. "Year-over-year home price growth accelerated in the fourth quarter, following back-to-back quarters of deceleration," said Mark Palim, SVP and Chief Economist at Fannie Mae. "Inventories of existing homes for sale have improved from a year ago but remain historically low, due largely to the so-called 'lock-in effect.' Since the beginning of October, mortgage rates have rebounded after bottoming out around 6.1% and are now inching closer to a new psychological barrier, the 7% threshold. The higher mortgage rate environment is not only hurting affordability, but it's also exacerbating the lock-in effect by further reducing homeowners' incentive to move." Examining Q4's YoY Increase and What It Means for 2025 Compared to the downwardly corrected 1.2% growth rate in Q3 2024, property prices increased a seasonally adjusted 1.7% in Q4 2024. In Q4 2024, housing prices climbed by a meager 0.3% on a nonseasonally adjusted basis. "The housing market in 2025 faces a difficult balancing act, with a notable decline in mortgage rates likely needed to help unwind the lock-in effect and thaw the supply of existing homes for sale," Palim said. "However, we believe such a decline would likely jumpstart demand from potential first-time home- buyers currently waiting to purchase, which could lead demand to outpace any improvement in supply, further exac- erbating already-high home prices and purchase affordability." In order to generate seasonally adjusted and nonseasonally adjusted national indices that are typical of the entire nation and intended to act as in- dicators of general single-family house price trends, the FNM-HPI is created by combining data at the county level. Beginning in Q1 1975 and continuing until the most recent quarter, Q4 2024, the FNM-HPI is made publicly available nationwide as a quarterly series. In the first month of every new quarter, Fannie Mae releases the FNM-HPI in the middle of the month. RENTERS GETTING MORE BANG FOR THEIR BUCK R enters, we may have some af- fordability relief ahead! In the United States, an apartment that is more than 70 square feet larger now than it was when rents peaked in mid-2022 is within the affordability range of a tenant on a $2,000 monthly budget. This is in line with a recent Redfin report published in December. In October, the median rent for an apartment in America was $1,615. The