Home prices across the United States and in Idaho are expected to grow only modestly over the next two years, as affordability challenges and tight housing supply continue to weigh on the market.
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According to analysts surveyed by Reuters, rising borrowing costs and limited inventory are likely to keep price growth subdued through 2027, even as demand remains uneven across regions.
Forecasts suggest that U.S. home prices will increase by just 1.8% in 2026 and 2.5% in 2027—well below historical growth trends and key inflation benchmarks tracked by the Federal Reserve.
Economists note that the central bank is expected to hold interest rates steady for longer, as inflation remains a concern. This has kept mortgage rates elevated, reducing affordability for potential buyers and slowing overall housing activity.
“The story’s one of the housing market basically not doing very much,” said James Knightley.
“A squeeze on affordability has meant demand has dropped away significantly and supply is constrained as well, and I don’t see the prospect of an imminent turnaround.”
The average 30-year mortgage rate, currently hovering above 6%, is expected to remain elevated for the foreseeable future, discouraging both buyers and sellers from entering the market.
In Idaho’s Treasure Valley, housing trends reflect broader national patterns, with modest price increases and ongoing inventory shortages.
Ada County recorded a 1.5% year-over-year increase in February, while Canyon County saw a stronger 6% gain. Median home prices reached $538,000 in Ada County and $441,990 in Canyon County, highlighting continued affordability pressures in the region.
Despite a gradual increase in listings over the past two years, supply remains tight—hovering at around two months in Ada County and 2.4 months in Canyon County, far below balanced market levels.
“We are currently undersupplied when it comes to listings, but we expect that to improve with the typical spring selling season and based on the listing activity we’re already seeing in our office,” said Yvonne Niedergesaess.
According to Niedergesaess, new construction plays a significant role in current inventory levels. “Ideally, we’ll have a significant increase in existing/resale listings in the next few months to give buyers more options and meet housing demand.”
The broader U.S. housing market continues to face structural challenges, including a significant shortage of available homes. Analysts estimate that approximately 2.5 million additional homes are needed to meet current demand, with most experts saying it could take more than five years to close the gap.
At the same time, economic uncertainty is further dampening buyer confidence.
“That creates a much more challenging environment for people to make a big purchase like a home,” said Crystal Sunbury.
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Adding to the pressure, tariffs on imported construction materials and ongoing labor shortages are increasing the cost of building new homes.
“Tariffs certainly act as a headwind,” said Gary Schlossberg. “You’re dealing with higher construction costs, a shortage of labor and pressure on wages and construction.”
Even though home prices have risen more than 50% since the COVID-19 pandemic, recent growth has slowed significantly, signaling a cooling market rather than a sharp downturn.
While some improvement in inventory is expected in the near term, analysts widely agree that the housing market will remain constrained by high borrowing costs, cautious consumer sentiment and limited supply.
As a result, homebuyers and sellers alike are likely to face a slow-moving market through 2027, with only gradual price increases and no immediate signs of a strong rebound.
Originally reported by Reuters and IBR Staff in Idaho Business Review.
