Barry Habib Shares 2025 Mortgage Forecast At Housing Economic Summit

Barry Habib’s highly anticipated 2025 housing market forecast premiered during HousingWire‘s Housing Economic Summit on Wednesday in Dallas.

Habib, the CEO of MBS Highway, kicked off his by presentation by referencing his 2024 forecast, telling the crowd of 250-plus that he hit the mark for home price appreciation and predicted lower numbers than expected for the 10-year Treasury yield and the 30-year fixed rate.

“We thought that mortgage rates could get to somewhere in the neighborhood of mid-5s to high-6s. It actually came in a little higher than that, but we did say that at around 6% it should increase activity, and it sure did in August as refinance activity, picked up,” he said.

This year, Habib predicts that mortgage rates will end the year in the low 6% range, in-between HousingWire’s 2025 prediction that mortgage rates will stay in a range between 5.75% and 7.25%.

HousingWire’s analysts also predict a home-price appreciation of 3.5%, less than the 5% growth seen in typical years. Habib predicts that home price appreciation will be between 4% to 4.5%.

Habib expects the 10-year yield to end 2025 in the 3.6% to 3.8% range.

Inflation, as measured by PCE, is projected to decrease to around 2.6% from 2.8%. The unemployment rate is projected to reach 4.4 to 4.5%, leading to Fed rate cuts, Habib predicts.

Habib also discussed the rise of demographic shifts in the market with 19 million new households expected in the next decade, namely the homebuying majority shifting from the Baby Boomer generation to Gen X. “It’s reasonable to assume that Gen Xers will increase in home ownership throughout the next 10 years, likely offsetting the decrease from boomers,” he said.

Habib continued, “You need 1.9 million homes a year. How much are we building? Currently, 1.37 million homes. It’s not an anomaly…it doesn’t take a rocket scientist to figure out that if you need 1.9 million and you’re building 1.3 million or 1.4 million, there is a shortage of homes. So therefore, if you believe the laws of economics, when supply outweighs demand, prices tend to rise. Now the straight line, not all the time, but over time prices tend to rise. Is housing a good investment? I would say it is.”