Mortgage rates near 6 percent to limit US home price gains
Analysts expect US home prices to grow modestly through 2027 while mortgage rates stay near 6%. A persistent supply shortage will likely limit market activity.
The United States housing market is expected to see only modest price growth through 2027 as high mortgage rates and a persistent shortage of affordable inventory continue to weigh on activity. According to a recent Reuters poll of housing analysts, home prices are projected to rise by just 1.8% this year and 2.5% in 2027, figures that trail the Federal Reserve’s preferred inflation metrics.
Economic momentum is being further dampened by geopolitical instability involving Israel and Iran, which has contributed to elevated inflation and higher Treasury yields. These factors have led the Federal Reserve to maintain interest rates at higher levels for longer than previously anticipated. The Personal Consumption Expenditures (PCE) Price Index, excluding food and energy, stood at 3.1% in January, well above the central bank's 2% target.
