U.S. home prices will rise just 1.4% in 2026 after a similar performance this year, a Reuters poll of property experts showed on Wednesday, the slowest annual pace in 14 years despite expectations for several more interest rate cuts.

While that might be good news for first-time buyers whose wages have not been able to keep up with much faster price rises in recent years, the market is set to remain subdued in part because house prices are already high and not enough entry-level homes are being built.

The key 30-year mortgage rate is set to average 6.18% next year and 5.88% in 2027, down from 6.32% currently, according to property experts surveyed between November 13 and December 9.

That modest decline comes despite market expectations for three more Federal Reserve policy rate cuts. The Fed is widely expected to cut rates by 25 basis points later on Wednesday, but policymakers remain divided over how much further they can ease without risking a pickup in consumer inflation.

Mortgage rates have stayed above 6% since late 2022, well above the 2-3% level during the COVID-19 pandemic that prompted many households to lock in cheap long-term loans they are now reluctant to reset at more than double the rate.

Next year’s forecast 1.4% rise in U.S. home prices measured by the S&P Cotality Case-Shiller composite index of 20 metropolitan areas would mark the slowest annual increase since 2011. Price rises are expected to accelerate to 2.7% in 2027.

This year is expected to end with a 1.5% increase, down from 2.1% and 3.5% predicted in the September and June surveys. That moderation reflects, in part, four consecutive monthly declines in home prices earlier in the year, the first such run since February 2023.

“Housing demand is constrained by a lack of affordability – high prices, elevated mortgage rates – while rising fears of joblessness are further depressing homebuyer appetite,” said James Knightley, chief international economist at ING. “At the same time supply is on the rise with insurance and property taxes putting financial pressure on stretched homeowners.”

Asked to identify the biggest barriers to homeownership for first-time buyers, 13 of 21 housing market experts chose a shortage of entry-level homes and the difficulty in saving up for a deposit. Eight chose a weak labour market.

Other options they could choose from included availability of credit and a lack of adequate assistance for first-time buyers.

“We are very short on supply of the entry-level home,” said Lawrence Yun, chief economist at the National Association of Realtors (NAR). He said converting some empty office buildings into residential units could be one remedy.

The median price of a new home surpassed $400,000 in 2021 – nearly 55% above the pre-pandemic levels – and has kept rising ever since.

First-time home buyers now make up just 21% of the market, according to the NAR, a record low.

An 85% majority, 17 of 20 analysts surveyed, also said affordability of homes for first-time buyers would improve over the coming year but most said progress would be modest at best.

Existing home sales, accounting for over 90% of total transactions, are forecast at a steady annualized 4.1 million-unit rate through this quarter and next before edging up to 4.2 million per quarter, well below the early 2021 peak of 6.6 million.

(Other stories from the Q4 global Reuters housing poll)

—

(Reporting by Sarupya Ganguly; Polling and analysis by Renusri K and Aman Kumar Soni; Editing by Hari Kishan, Ross Finley and Tomasz Janowski)