Welcome back Fanny May just revised Downward their forecast for home sales Through 2025 they also believe that interest Rates will be higher than their previous Forecast as well I have a lot to share In today's video I don't want to waste Your time let's go ahead and Dive Right In This is their actual press release Just announced last week it says their Higher mortgage rate forecast leads to a Decrease in 2024 home sale Expectations however though this is Based on existing houses and also new Houses through 2025 revised downward from the forecast That was posted one month ago which I'll Share with you guys it says recent Inflation data likely to keep rates Higher for longer than was previously Forecasted we're not seeing uh inflation Winding down to the uh 2% rate the FED Wants to see and because of that they Actually revise upward their forecast For rates through 2025 uh this group Which is called their ESR Group which Stands for their economic and strategic Strategic research group now expects the 30-year fixed mortgage rate to end the Year at 6.4% so the average rate this year They're forecasting to be at 6.4% the daily rate as of today which is On what is it Wednesday no Tuesday March
26 is at 6.91% according to the mortgage News Daily any case their forecast this year Uh to be at 6.4% overall is up from the 5.9% they predicted one month ago strong Headline job numbers and a hotter than Expected inflation report has led Financial markets to price in a less Aggressive cutting path by the Federal Reserve while this group notes that Labor market indications are mixed and Disinflation will likely resume it also Believes that recent data are unlikely To provide the FED with a greater Confidence it needs to begin easing Monetary policy in the near term in Other words Limon turns here if we were To see inflation dive down down to the 2% rate that the FED wants to see uh we Would likely see a Fed pivot in other Words the FED decreasing the fiddle Funds rate which would of course um Could cause a mortgage rate to decrease As well however we're not seeing that Just yet because the data coming in is Showing that inflation is coming down But not coming down as much as the FED Wants to see and that's why last week The FED decide to pause any rate changes They're not seeing data coming down to The levels they want to see also According to Doug Duncan who's Fanny May's um senior vice president and chief Economist he say the following uh the US
Housing market is likely to continue to Face the Dual affordability constraints Of high home prices and elevated rates In 2024 I will add 2025 as well speaking Of that take a look at this this is from Redin as of today it says the typical Household earns roughly $30,000 less than what's needed to Afford a medium pric home today that is An improvement for last year but overall Americans earn far less than what's Needed to buy a medium price home in the US sad but true housing affordability Crisis we're having right now it says Buyers need to earn a whopping $114,000 per year to afford a typical us House uh that's about 35% more than the Typical household actually makes that is Improving from October when we had All-time record highs uh when uh people Needed an income of 21,000 to buy an average price home back Then Rin also States here that mortgage Rates have come down from the recent Peak that was set back in mid- October Last year giving buyers a bit more Purchasing power but affordability Remains con or constrained as housing Costs grow twice as fast as income Housing cost is due to the rise in rates And home prices so take a look at this Right here these are the meeting list Price um for all redin metros this is According to redin status Center looking
At asking prices on National level so Right now the Medan list price is Approximately 44,000 up by about 5.7% from one year ago back in mid October when rates were averaging around 8% back in mid October which is Approximately right there the median List price at 374,000 quite a bit lower Than the 44,000 we're seeing right now so even Though rates have come down from the uh 10year High 10 plus year highs we saw Back in October 2023 um overall housing affordability is Very very low due to the rise in prices So much in fact that to start the year We were only up by 3.8% uh regarding asking prices now We're up by about 5 7% and speaking of That redin noted the following the Meeting monthly housing payment um for Home buyers this is based on interest Rates um and also of course based on Asking prices is at $2,838 per month down from the all-time Record highs of just over $3,000 per Month back in October 2023 but up a whopping 74% from February of of 2021 when rates were near all-time Record lows of course home prices were Much lower as well in fact don't take my Word for it take a look at this because
In February uh the meeting asking price Was approximately 329,000 now it's a Whopping 44,000 this means that asking prices Compared to February 2021 are up a Whopping 23% so a more or less a double whing Right rising in rates increasing from About 3% to about 7% so rates more than Doubling and on top of that home prices Increasing by about 23% as well and this Of course is why average monthly housing Payments have increased a whopping 74% over the past 3 years in any case Let's get back to Fanny May's um real Estate market predictions it says we Have revised downward our outlook for Home sales this month largely due to Higher the the higher interest rate Environment however we still expect an Upward path in sales over the year even If there are some bumps along the way by The way a very small increase compared To the 28-year low uh we saw in 2023 Though it also says we believe an Increasing number of transactions or Home sales will be driven by households Who can no longer put off their moves um Simply due to the lock in effect in Other words people will move due to life Events so death divorce uh relocation a New job Etc and because of this um we May see more new listings come on the Market which is exactly what we're
Seeing right now as well we're seeing Inventory levels rise due to an increase In the number of new listings in fact They say here according to realtor.com The flow of new listings these are People listing their houses for sale uh Rose by 11. 3% this February compared to February of 2023 however they note Though a future rise in listings is also Expected to outpace the growth in sales So think of it this way um a bathtub Right a bathtub is our housing market The water level in the bathtub is the Amount of houses for sale in order to Increase the water level you need to see More listings hitting the market more Water filling up the bathtub increasing The water level or increasing housing Inventory H in contrast what we saw in 2022 we saw a huge decrease of contracts Being signed a huge decrease in home Sales so as more water and more new Listings hit the market the water level Increased even though we saw um a Relatively low level of new listings What they're seeing right here is that We're going to see more new listings and Then sales the drain of the bathub um Not uh draining as fast as the level Of new Len in the market so in other Words um uh Supply outpacing demand Which will cause inventory levels to Rise in 2024 and according to them that Will lead to a gradual loosening of the
Currently very tight housing market so Any case let's get back to overall their Forecast this month um regarding um Housing starts uh we'll look at um home Sales both new and existing home sales I Have a lot of data to share regarding That and also uh the home price the Price Forecast and their interest rate Forecast as well so let's first talk About housing starts what I'm more Focused on by the way is single family Housing starts so what happened in 2023 housing starts for new single Family houses a housing start by the way Is the beginning phase uh in the Construction of a brand new house that Decreased by 6% uh last year but the new Forecast is a increase of nearly 7% Then in 2025 a small increase of 2.7% in regards to new home sales let's Have a look at this um because new home Sales and also existing home sales both Got revised downward compared to their Forecast that was posted one month ago So for example they're now calling for a 4.9% increase in new home sales in 2024 Compared to 2023 and then in 20 25 another increase Of 4.6% in regards to existing home sales That's single family condos and co-ops Uh that decreased a whopping 18.7% last year compared to 3.9% for new home construction sales so
Here's our forecast for existing home Sales and they're calling for a 4.25 million existing home sales this Year and that's a small increase of 3 % Their previous forecast was at 4.3 Million so a slight downward Revision in Their forecast regarding home um sales Of existing houses also the previous Month was calling for 4.7 million um Existing home sales in 2025 now it's at 4, 666,000 that's an increase of nearly 11% Compared to the previous year so what Does this all mean how's this compared To previous years and I have this to Share with you guys um so I'm going to Get a little bit nerdy here so my Apologies so let's look at 2023 um actually let's have a look at 2021 first so 2021 of course our housing Market was absolutely on fire home Prices and home sales absolutely Skyrocketed so for the year we had 6,1 120,000 existing home sales on a National level and by the way that was a 15-year High then last year it decreased Or it actually dropped uh to 4,90 th000 that was a 28-year low so in Span of just two years we went from a 15year high in sales to a 28-year low The lowest level since 1995 huge changes in just two years it's Pretty astonishing anyway so forecast
For this year at 4 25 million a small Increase of 3% from the previous year But still down by 21% from 2019 and 2018 also as a note Right there besides last year uh at 4.2 Million that' be the fewest number of Existing home sales since 2010 in other words extremely low levels As well then they forecast uh in 2025 just under 4.7 million that' be That' be an increase of 11% from 2024 But still down by 133% from preco levels Also I did some digging for you guys as Well the meeting sale numbers so in Other words historical averages what we Should expect each and every year on Average uh was at 5,300,000 that's the Medan number of existing home sales Since 1989 what's wild about this is is that Even though they're calling for a what 11% gain in 2025 at 4.66 million that's still nearly 400,000 Fewer compared to Long Run averages at 5 Million even though that would be far Less than the um long-term historical Average um over the past two decades That still would be a three-year High Though because the last time we had um At least that amount of home sales was Back in 2022 when at that time we had 5 Million home sales all right let's get Back to fenny May's predictions here for 2024 and
2025 I just want to provide that context Because it's kind of hard to figure out What is really 4.2 million or 4.66 Million what does that really mean so Hope that helps out all right let's have A look at home prices this is based on Fanny ma HPI or their home price index Um one thing I found to be really Interesting is that the quarter to Quarter Peak uh was at or actually is Calling for that to be this quarter the First quarter um this year uh to Increase by 7.2% compared to the first quarter of 2023 thereafter though they're calling Um every single quarter thereafter They're calling for a small increase or I should say a small decrease each and Every quarter but still in positive Territory by the time we hit Q4 2025 so Q4 2020 2025 a small increase of 3% compared to the fourth quarter of 2024 so overall they're calling for a 3.2% rise in prices this year and then Next year a small gain of. 3% and that By the way was exactly the same what They forecasted um one month ago another Change though regarding uh rates though Like I mentioned their forecast for Rates were actually lower a year Last month compared to what we're seeing Right now so our new forecast is uh for The year to be at 6.6% uh this year then to decrease to
6.2% in 2025 now nearly everyone is anticipating For a significant decrease in rates this Year but based on their forecast here Overall to be at 6.6% not a big uh Change compared to the um uh what 6 uh 6% rate they forecasting for the first Quarter this year and the second quarter This year as well so fenny may is now Forecasting that rates will be higher Than their previous forecast their Previous forecast uh this year was at 6.2% now their new forecast is at 6.6% also one month ago for 2025 they were predicting that rates Were going to dip below 6% down to 5.7% now they're new predictions is at 6.2% overall for 2025 one more thing I Want to mention regarding um rates Though is that every single month or Every single quarter I should say um Since Q3 this year they are predicting That rates will slowly decrease through At least Q4 2025 fenny May is also Predicting that we'll see a higher share Of refinances compared to previous years So the share of refinance based on all Single family uh mortgage originations Was at 177% last year then to increase To 29% next year and with that said please Comment below your biggest takeaways From today's video also if you guys got Any value out this video whatsoever then
Please hit the like button great Appreciate that of course I appreciate You hope you guys have an awesome day Look forward to seeing you on the next Video [Music]
