Home price growth picked up in Q4, Fannie Mae reported

Fannie MaeThe latest Home Price Index (HPI) shows that single-family home prices rose 5.8% from Q4 2023 to Q4 2024, which is a dramatic increase from the revised annual growth rate of 5.4%.

For the quarter, home prices increased by a seasonally adjusted 1.7% in Q4 2024, which is an increase from the downwardly revised growth rate of 1.2% in Q3 2024. On a seasonally adjusted basis, home prices increased by only 0.3% in Q4 2024.

Fannie Mae’s HPI is a national, cumulative home price index that measures 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 consecutive declines,” said Fannie Mae Senior Vice President and Chief Economist Mark Palim. “Inventories of existing homes for sale have improved over the past year but remain historically low, largely due to the so-called ‘lock-in effect.’ Since the beginning of October, mortgage rates have risen again after coming out of about 6.1% and are now approaching a new psychological barrier, the 7% threshold.

Palim continued: “The housing market in 2025 is facing a difficult balancing act, with significant reductions in mortgage rates likely to be needed to offset the effect of locking in and melting the supply of existing homes for sale. However, we believe that such a decline could exceed the demand of potential first-time homebuyers who are waiting to buy, which could lead to the need to outpace any improvement in supply, pushing up already high house prices and affordability.”

Fannie Mae’s forecast for 2025 suggests that the 2025 housing market is unlikely to deviate from 2024 trends. Palim noted in today’s HPI release that the current environment of high mortgage rates is putting pressure on purchasing and “exacerbating the lock-in effect by further reducing homeowners’ incentive to move.”

HousingWireThe 2025 forecast expects home price declines to be slower, but not worse this year, predicting a 3.5% home price appreciation in calendar year 2025.

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