Fannie Mae‘s latest Home Price Index (HPI) shows single-family home prices increased 5.8% from Q4 2023 to Q4 2024, a surprising increase from the previous quarter’s downwardly revised annual growth rate of 5.4%.
Quarterly, home prices rose a seasonally adjusted 1.7% in Q4 2024, an increase from the downwardly revised 1.2% growth rate in Q3 2024. On a non-seasonally adjusted basis, home prices increased just 0.3% in Q4 2024
Fannie Mae’s HPI is a national, repeat-transaction home price index measuring the average, quarterly price change for all single-family properties in the United States, excluding condos.
“Year-over-year home price growth accelerated in the fourth quarter, following back-to-back quarters of deceleration,” said Fannie Mae Senior Vice President and Chief Economist Mark Palim. “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.”
Palim continued: “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. However, we believe such a decline would likely jumpstart demand from potential first-time homebuyers currently waiting to purchase, which could lead demand to outpace any improvement in supply, further exacerbating already-high home prices and purchase affordability.”
Fannie Mae’s 2025 forecast suggests that it’s unlikely that the 2025 housing market will deviate from 2024 norms. Palim commented in today’s HPI release that the current higher mortgage-rate environment is putting pressure on affordability and “exacerbating the lock-in effect by further reducing homeowners’ incentive to move.”
HousingWire‘s 2025 forecast anticipates that home-price appreciation will slow, but not turn negative this year, forecasting 3.5% home-price appreciation for calendar year 2025.
