This year, Habib forecasts that mortgage rates will close out the year in the low 6% range, falling in between HousingWire’s 2025 projection of mortgage rates staying within a range of 5.75% to 7.25%.
Analysts at HousingWire also anticipate a home-price appreciation of 3.5%, which is lower than the typical 5% growth seen in previous years. Habib’s prediction for home price appreciation falls between 4% to 4.5%.
Habib expects the 10-year yield to finish 2025 within the range of 3.6% to 3.8%.
Regarding inflation, as measured by PCE, it is expected to decrease to around 2.6% from the current 2.8%. The unemployment rate is projected to reach 4.4% to 4.5%, potentially leading to Fed rate cuts according to Habib’s forecast.
Habib also touched on the upcoming demographic shifts in the market, with an estimated 19 million new households expected in the next decade. He highlighted the transition of the homebuying majority from the Baby Boomer generation to Gen X. “It’s reasonable to expect that Gen Xers will increase their home ownership over the next decade, potentially offsetting the decrease from boomers,” he explained.
Continuing his insights, Habib emphasized the current housing supply shortage, stating that only 1.37 million homes are being built annually, falling short of the required 1.9 million homes. He pointed out that when supply is lower than demand, prices tend to rise over time, making housing a lucrative investment opportunity. “Is housing a good investment? I would say it is,” Habib concluded.