Goldman Sachs Forecasts 4% Housing Price Increase for 2025
U.S. home prices are forecasted to rise by 4.5% this year and 4.4% in 2025, driven by anticipated Federal Reserve rate cuts and a strong underlying economy. Goldman Sachs Research has updated its projections, highlighting that despite the current affordability challenges, lower mortgage rates could enhance buying power and sustain price growth. The Fed is expected to implement a series of rate cuts due to a softening labor market, which could reduce mortgage rates from their recent peak, thus easing some financial pressure on homebuyers.
For homebuilders and developers, this forecast suggests a favorable environment for continued investment and development. While affordability remains a significant concern, particularly in regions like Florida with high insurance costs and reduced income growth, the overall trend points to increased home values and improving market conditions. Areas such as the Midwest, Northeast, and parts of California are expected to see robust price appreciation, making them attractive markets for new projects and developments. As mortgage rates are projected to decline further, this could stimulate market activity and potentially ease affordability challenges over time.
