logo
US housing to get a bit more affordable this year, but mainly due to lower rates: Reuters Poll

US housing to get a bit more affordable this year, but mainly due to lower rates: Reuters Poll

Reuters28-02-2025

BENGALURU, Feb 28 (Reuters) - Affordability in the U.S. housing market will improve modestly in the coming year, according to property market experts polled by Reuters, based on expectations for a few more interest rate cuts, not an increase in homes available to purchase.
Home prices are set to keep rising modestly this year and next, in forecasts broadly unchanged from a November survey and suggest little has been done to alleviate relentless financial pressure on aspiring first-time buyers.
A 62% majority of respondents, 13 of 21, in a February 14-27 Reuters survey said purchasing affordability for first-time home buyers over the coming year would improve, compared with 53% three months ago who said it would worsen.
That was mostly down to an expected dip in 30-year mortgage rates (USMG=ECI), opens new tab from near 7% to an average 6.76% this year, and 6.32% next, poll medians showed.
"By various measures, U.S. housing affordability is still the worst in about four decades. While we will see some improvement in the coming year, it will still be a challenge, particularly for many first-time buyers, to get into the market," said Sal Guatieri, a senior economist at BMO Capital Markets.
"We expect home prices to continue rising, but at a more moderate rate than recently," Guatieri added. "This just reflects our view the housing market will slowly pick up as mortgage rates decline in response to anticipated Fed easing later this year and through next year."
President Donald Trump has announced a series of executive orders and sweeping policy changes over the past month in the White House.
But apart from expectations for a deregulation agenda, the administration is yet to announce any plans to address the lack of affordable homes.
In the meantime, U.S. home prices based on the S&P CoreLogic Case-Shiller composite index of 20 metropolitan areas (USSHPQ=ECI), opens new tab were expected to rise 3.6% this year, median estimates from 27 property analysts showed.
Home prices were then predicted to go up 3.3% and 3.5% respectively, in the coming two years.
Part of this has to do with a persistent supply shortage, which has kept average U.S. home prices over 50% above pre-pandemic levels.
Over 500 basis points of Fed rate hikes in 2022-23 broadly did nothing to lower house prices.
The shortage of homes available to buy is partly driven by existing homeowners who secured historically rock-bottom mortgage rates during the pandemic and are reluctant to sell.
"Since such an overwhelming percentage of the outstanding mortgage market is fixed-rate, where borrowers were able to take out loans in 2020-21 with two- or three-handle rates, their incentive in this current environment is to keep their homes off the market," said James Egan, Morgan Stanley housing strategist.
"That's kept inventory very constrained and put upward pressure, and a holistic level of support, for home prices," said Egan, who doesn't expect affordability to improve drastically over the next year or two.
Asked what would rise faster over the coming year, a 55% majority, 11 of 20, said home prices over rents. Average rents will increase around 3% this year, according to the median estimate from a smaller sample of respondents.
Existing home sales (USEHS=ECI), opens new tab, comprising over 90% of total sales, were expected to rise modestly until mid-year and rise to an annualised rate of 4.15 million and 4.23 million units, respectively, in the third and fourth quarters.
But those were downgrades from the previous survey and well below the 6.6 million units recorded in early 2021.
"Fundamental demand remains strong due to an estimated housing deficit of 2.6 million units providing a floor under house prices," said Cristian deRitis, deputy chief economist at Moody's Analytics.
((Other stories from the Q1 global Reuters housing poll))

Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Exclusive: India's central bank to use cash reserve ratio more actively to manage liquidity, says source
Exclusive: India's central bank to use cash reserve ratio more actively to manage liquidity, says source

Reuters

timean hour ago

  • Reuters

Exclusive: India's central bank to use cash reserve ratio more actively to manage liquidity, says source

MUMBAI, June 11 (Reuters) - India's central bank plans to use cash reserve ratio "more often" as a tool to manage liquidity and speed up monetary policy transmission, moving away from the practice of deploying it only in times of extreme cash swings, a source told Reuters on Wednesday. The person aware of the Reserve Bank of India's thinking declined to be identified because they are not authorised to speak to the media. The RBI did not reply to an email seeking comment. In a surprise move on Friday, the Reserve Bank of India announced a 100-basis-points reduction in the CRR to 3%, to be implemented in four equal tranches between September and November, releasing 2.5 trillion rupees ($29.25 billion) into the banking system. ($1 = 85.4790 Indian rupees)

ECB's wage tracker points to 3.1% growth this year
ECB's wage tracker points to 3.1% growth this year

Reuters

time2 hours ago

  • Reuters

ECB's wage tracker points to 3.1% growth this year

FRANKFURT, June 11 (Reuters) - Negotiated wage growth across the 20 nation euro zone is seen at 3.1% this year, including smoothed one-off payments, in line with figures projected a month earlier, the ECB's monthly wage tracker showed on Wednesday. With unsmoothed one-off payments, the tracker pointed to 2.9% growth in 2025, the ECB said. The ECB has long argued that wage growth around 3% would be consistent with its 2% inflation target and the fresh figures support the bank's argument that it has now delivered on its target after years of overshooting.

General Mills mulls sale of China Haagen-Dazs stores, Bloomberg News reports
General Mills mulls sale of China Haagen-Dazs stores, Bloomberg News reports

Reuters

time2 hours ago

  • Reuters

General Mills mulls sale of China Haagen-Dazs stores, Bloomberg News reports

June 11 (Reuters) - General Mills (GIS.N), opens new tab is considering selling its Haagen-Dazs ice-cream stores in China, Bloomberg News reported on Wednesday, citing people familiar with the matter. The Minneapolis, Minnesota-based company may seek several hundred million dollars for the assets in a sale process that could begin this year, the report added. The discussions are in early stages and the company may not pursue a sale, the report said, adding that General Mills intends to continue selling Haagen-Dazs in places such as supermarkets and convenience stores in China. Reuters could not immediately confirm the report. General Mills did not immediately respond to a Reuters request for a comment. General Mills has been undergoing a restructuring and said last month that it would record a charge of about $70 million in its current quarter. The restructuring efforts, estimated at around $130 million, are expected to be completed by the end of its fiscal year 2028. Packaged food companies including McCormick, General Mills and Conagra Brands (CAG.N), opens new tab have faced slowing demand as sticky inflation has compelled budget-conscious customers to hunt for value even for essential items such as groceries.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into the world of global news and events? Download our app today from your preferred app store and start exploring.
app-storeplay-store