This year, Habib’s forecast for mortgage rates at the end of the year is in the low 6% range, falling within HousingWire’s prediction for 2025 of rates ranging between 5.75% and 7.25%.
Analysts at HousingWire also anticipate a 3.5% home-price appreciation, a decrease from the typical 5% growth. Habib, on the other hand, predicts that home price appreciation will be between 4% and 4.5%.
Habib expects the 10-year yield to close out 2025 in the 3.6% to 3.8% range.
As per Habib’s projections, inflation measured by PCE is expected to decrease to around 2.6% from 2.8%. Additionally, the unemployment rate is forecasted to reach 4.4% to 4.5%, potentially leading to Fed rate cuts.
Habib also highlighted the impact of demographic shifts in the market, with an estimated 19 million new households expected in the next decade. The homebuying majority is anticipated to transition from the Baby Boomer generation to Gen X, potentially resulting in an increase in Gen X homeownership over the next 10 years.
Commenting on the shortage of homes in relation to demand, Habib emphasized the need for 1.9 million homes annually, while only 1.37 million homes are currently being built. He pointed out that this housing shortage could lead to price increases over time, as supply struggles to meet demand. Habib affirmed that housing remains a solid investment option amidst these market dynamics.