Sharp fall in UK business activity forecast as economic gloom deepens
- today, 7:04 PM
- theguardian.com
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U.S. home prices will continue to tick up next year, according to Bank of America’s forecast, though growth is expected to be at a slower pace than this year.
Last week, the investment bank’s mortgage-backed securities (MBS) research team told ResiClub it is forecasting a 2% increase in U.S. home prices in 2025—down from its 4.7% forecast for 2025 issued in June.
“Positive [national] home price growth for next year is expected largely due to light supply of homes, keeping prices elevated,” Jeana Curro, the head of MBS research at Bank of America, told ResiClub. “Although we note inventories [of homes for sale] are gradually building which is contributing to the slower pace of appreciation.”
The tight inventory situation is largely attributed to high mortgage rates, which have left many existing homeowners “locked in” to sub-3% mortgages. With little incentive to sell, homeowners are contributing to constrained inventory levels that continue to put upward pressure on home prices.
For 2025, Bank of America assumes an average mortgage rate of 6.5%, slightly below 2024’s 6.8% average, Curro says.
However, the forecast doesn’t indicate a uniform picture of modest growth for every U.S. housing market. Bank of America anticipates that certain markets will experience outright price declines in the coming year.
“There are some regions where inventory is increasing—either via new construction, availability of affordable rentals, or homeowners motivated to sell due to surging taxes and insurance costs,” said Curro. “Austin, Texas, and Tampa, Florida, are examples of markets seeing an uptick in inventory.”
Home prices in two notable pandemic boomtowns have recently experienced declines. In the Austin metro area, home prices dropped 3.5% year-over-year (and are down 21% from their peak), while Tampa saw a 1.2% year-over-year decline, according to the Zillow Home Value Index.
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