Executive Summary
Home Economics projects national home price appreciation of 1.6% in 2026, placing our forecast in the 15th percentile of historical outcomes and 31st percentile relative to panel economists.
Over the full five-year forecast horizon (2025-2029), we expect cumulative appreciation of just 8.9%—a figure that falls in the 13th percentile of all historical five-year periods since 1975 and dramatically below the panel consensus of approximately 20%a. This represents less than half the historical norm, suggesting a prolonged period of below-trend growth reminiscent of the early 1990s housing correction.
This forecast emerges from a rigorous econometric model that emphasizes fundamental valuation metrics, housing supply dynamics, and momentum factors. Current conditions—with home prices sitting 1.58 standard deviations above their income-adjusted norm and new home inventory levels elevated at 9.2 months—suggest a multi-year correction lies ahead, even as the Federal Reserve embarks on an aggressive easing cycle.
Our Forecast vs History
Backdrop
Home Economics was invited to submit projections to the Pulsenomics Home Price Expectations Survey, the premier panel forecast for U.S. residential real estate. Founded by Nobel laureate Robert Shiller, this survey aggregates predictions from 107 leading housing economistsb, including:
- 26 academic economists from universities (MIT, Columbia, Wharton, University of Miami, Ohio State)
- 25 independent consulting and research firms (Moody’s Analytics, Oxford Economics, Capital Economics)
- 18 financial institution economists (BMO Capital Markets, TD Bank, Wells Fargo, First Trust Advisors)
- 9 real estate platforms and data providers (Zillow, CoreLogic, Redfin, First American)
- Credit rating agencies and government economists (S&P Global, IMF, Federal Reserve Bank of St. Louis)
The survey serves as the consensus benchmark for institutional investors, policymakers, and housing market participants nationwide. We are pleased to have been invited to participate in this distinguished panel.
Our Philosophy on Forecasting
Economic forecasting has a notoriously poor track record. Studies consistently show that professional forecasters fail to predict turning points, exhibit persistent biases, and produce predictions that cluster around consensus rather than reflecting genuine analytical diversity. Both Type I errors (false positives) and Type II errors (false negatives) plague the profession. According to IMF analysis, professional forecasters predicted only 2 of 60 recessions one year in advance across 63 countries from 1989-1998.
So what value do forecasts provide?
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