Welcome back Fanny May just announced Their latest real estate market Predictions through 2025 they're predicting we're going to See an increase in home sales through 2025 yet mortgage rates or average rates Are going to be at or above 6% for the Next 2 years uh here's a new report uh Just posted on the 23rd of April it says A hot economy and inflation likely to Keep rates higher for long we've been Talking about this for quite some time And by the way I'll have an update for You guys regarding the streets forecast For future rate cuts by the FED uh this Year it says the rise in new home Listings projected to boost home sales Despite the recent run up in rates so They're saying here that we're seeing More houses being listed for sale that's Going to increase inventory levels as Well but also help increase sales as Well it says stronger than expected Economic and inflation data have pushed Interest rates higher and financial Markets to pric in fewer Federal Reserve Rate Cuts this year I'll have some news To share regarding that because I mean Remember just a few months ago everyone Was talking about how the Fed was going To Pivot or start decreasing rates in March and here we are in uh the end of April no rate Cuts in the near future it Says while the ESR Group which is their
Economic and strategic research Group by Fenny May is forecasting existing home Sales to rise modestly over the course Of the Year expects a flow of new Listings the amount of people listing to House of ver sale to outpace home sales Which should help gradually thaw or help Improve housing inventory and contribute To decelerating home price growth so That was a lot right again think of um Uh inventory levels as a batb the amount Of new lines hitting the market is water Going to the bathtub which of course Increases the water level or increases Hous inventory whereas the drain of a Bathtub is pening home sales and close Home sales so we're saying here that the Flow of nines or water into the bathtub Is going to outpace home sales or the Draining of the bathtub so in other Words uh Supply is going to outpace home Sales this year and when we see more new Listings uh compared to home sales that Increases the water level or increases Housing inventory which again put Downward pressure on home prices now Speaking of that here is a new report From realtor.com actually we just Announced last Thursday so in regards to New listings that increased by 7.2% from 12 months ago meanwhile active Listings or inventory Rose by 29.1% so we're seeing a rise of new Listings and that's causing active
Listings to increase further in regards To the odds of the future r rate cut by The FED a great tool I use is the CME Fed watch tool just Google that it'll Take you to this right here and of Course I'll provide um links in my video Description below for all the Articles I'm going over in today's video so any Case I'm looking at their next meeting Which is one week already um I don't Think anyone's predicting that the fed's Going to cut rates in the next meeting So for example by a 95.9% chance uh we're going to keep Rates the same at 5.50% that's the federal funds rate Which is the rate that Banks charge each Other for overnight lending uh due to Reserve requirements uh the FED does not Control mortgage rates but uh the Fluctuations or the increases or Decreases in the federal fronts rate Does have an indirect relationship to Mortgage rates and so because we're not Seeing a Fed pivot or a a cut to Interest rates anytime soon that's why We're in this higher for longer interest Rate environment so their next meeting After that is on June 12th a high Probability we're going to be at the Same rates July 31st again a high Probability we're going to be at the Same rates again a pause then in midt a Potential for a 25 basis point rate
Decrease at least a 46% chance we're Going to be at 5.25% compared to 5.5% right now now This is much different compared to um Just one month ago because of this the Odds of a 25 basis point rate decrease Again right now which is on April 23rd a 46.4% chance they're going to decrease Rates by 25 basis points but one month Ago we're at 19.6% and a 44.6% chance we're going to be at 5% or A 50 B Point rate decrease on top of That one month ago there was a uh 29.9% chance we're going to be at 4.75% that would be three quarter point Rate decreases um but the odds right now Of that is only at 3% so again higher For longer is the name of the game here Let's fast forward actually to December So to end the year the streets forecast Is at um for a 35% % chance we're going To be at 5% so um two quarter point rate Decreases this year is what these three Is forecasting which is much different Compared to one month ago so one month Ago the odds of that was 18% but the street was kind of split Between a 1% Point decrease down to 4.5 and a 75 basis point rate decrease So just one month ago um the street was Forecasting for a lot more rate cuts and Now we're only looking at around two Rate Cuts this year and because of that
Fny may believes we're going to have This higher for longer interest rate Environment um so we're going to see um Home sales increase but these higher Rates are causing um housing Affordability issues for many home Buyers right now going back to fenny May's um report stronger than expected Economic data including labor and Consumer spending reports um retail Spending just last week I believe it was I came in much higher than I expected And on top of that we had a much higher Reading on CPI or cons or the Consumer Price Index the prices that everyday Consumers pay for goods and services This has led financial markets to Increasingly push back expectations for The FED to cut rates this year as we saw Fenny may also believes the interest Rate environment looks increasingly to Be one of higher for longer thus we have Revised our federal funds rate Outlook To just two rate Cuts this year from Three starting in September um this year Previously it was actually in June home Sales are also expected to remain Subdued but drift higher over 2024 which by the way I'll share their Forecast for home sales new home sales And existing home sales through 2025 and Compare that going back to 1989 so even though they're calling for Sales to drift slightly higher from uh
2023 we're still going to be at very low Levels okay let's talk about that here In just a little bit let's first discuss Though housing starts why I'm more Focused on our single family housing Starts this is the beginning phase of The construction of a brand new house uh That decreased by 6% in 2023 compared to 2022 but this year the calling for 11.3% Increase and then a 4.6% gain in 2025 From 2024 this is much different compared to Multif family look at this multif family This year down 20% and in 2025 decreasing further down By 2.2% I would imagine this um forecast Here is because we have um very close to All-time record highs for multif family Units under construction right now let's Also discuss a new single family home Sales as well as existing as well so new Single family houses increased by 3.9% last year compared to 2022 versus existing taint by nearly 19% So new home construction sales uh Rose Slightly but existing absolutely taint At 4,90 th000 that was the lowest level Since 19 95 let's fast forward to this Year though um it's actually pretty much On par with uh new versus existing Rising by about 4% in
2024 then 2025 increasing by 12.8% for New single family houses and then a 10% Gain of existing houses also uh leave me A comment below your thoughts regarding This because I noticed this as well is That in Q2 by the way all these figures Right here are Q q1 Q2 3 and four and um It's interesting to see here that uh Sales of existing houses they're calling For Q2 to decrease compared to q1 but Thereafter a small gain each and every Quarter compared that to sales of new Houses increasing each and every quarter Through 2025 okay let's talk about how these Figures for existing houses compared to A Year's past and I actually put this Together this is based on Um annual figures from the National Association rors going back to 1989 so Let me just kind of take a step back Here talk about what happened in 2021 Back then we had uh 6.12 million Existing home sales uh that year that Was a 15year high two years later back In 2023 it decreased to 4, 90,000 that was the fewest number of Existing home sales since 1995 so in two single year two single Years in two years we went from a 15year High in sales down to a 28-year low also By the way a last year at 4.1 million
Around uh that was around 1 million less Than historical averages going back to 1989 as well so any case let's talk About their forecast uh this year and Next year so again this year uh for , 266,000 Besides last year that would be the Fewest number of existing home sales Since 2011 in other words extremely low Levels then in 2025 to increase to uh Just under $4.7 million that would be a Threeyear high but around 300,000 fewer Compared to the long-term average by my Dumb math or my nerdy Excel formula There the meeting number of existing Home sales since 1989 is just over 5 million so therefore Their forecast this year and next year Quite a bit lower than the long run Average also just for fun I added the Year- of your change and also I added This as well the change from 2019 and 2018 which is obviously preo if we had Uh 4,266 th000 this year that be a 20% Decrease compared to preco levels and Then in uh 2025 a decrease of 12% going back to Fanny May's predictions let's talk about Home prices then rates so in 2024 They're calling for home prices based on Fanny ma HPI or their home price index To increase by 4.8% from
2023 then to increase further to 1.5% Compared to 2024 um also something I noticed as well I've been making this video for you guys For a couple years now when looking at Their forecast that was published one Month ago this is a significant increase As well so in their forast from one Month ago they called for a 3.2% Increase in home prices in 2024 now it's at 4.8% also a month ago they called for Only a 3% increase in their HPI in 2025 Now it's at 1.5% remember when I started the video Saying how we're going to see this Decelerating of home prices here's Exactly what I mean by that because They're calling for um home prices to Increase through Q4 of 2025 but the rate To slow down each and every quarter so For example in Q4 2025 their HPI is going to increase Potentially by 1.5 % compared to Q4 of 2024 all right let's also talk about Their forecast for average 30-year fix Rate mortgage rates in Q2 this year They're calling for the average rate to Be at 6.7% exactly the same compared to q1 so Rat's been more or less flat for the First half this year thereafter though They're calling for rates of decrease But not by very much so for example in
202 four they're calling for the average Rate for the entire year on average to Be at 6.6% then to decrease to 6.1% in 2025 and again the reason why they're Calling for this higher for longer Interest rate environment is that Because of H for longer inflation data In in other words inflation's not Wanting down just yet and on top of that We're not seeing a whole lot cracks in Our labor market um thus far as well so Uh because of all this they're calling For only two rate cuts by the fed this Year which is going to keep average Mortgage rates higher for longer as well But of course I would love to hear from You guys what do you guys think about Their real estate market predictions Through 2025 please leave me a comment below Thank you so much for watching today's Video I appreciate you have an awesome Day and we'll see you next Video that's [Music]
