For much of the 2020s, homeownership has felt like an automatic wealth generator for many American families.
During the pandemic housing boom, annual home price increases often reached double digits. Over the same period, the value of real estate held by U.S. households increased by more than 60%, according to Federal Reserve Board data.
But Moody’s Analytics predicts that the rapid rise in home prices that fueled the wealth boom is unlikely to be repeated anytime soon.
The research firm predicts that national home price growth will average about 2.1% annually from 2026 to 2035, according to projections shared with CNBC Make It. That’s well below the roughly 5% annual appreciation rate that homeowners have become accustomed to over the past decade, according to S&P CoreLogic Case Shiller data.
A panel of housing experts surveyed by Fannie Mae similarly predicts that home prices will rise slowly, averaging about 2.2% a year, through 2028.
“In general, I think the days of double-digit year-on-year gains are over, at least in the short term, as housing is not a post-pandemic rocket ship and is returning more slowly to being a stable wealth-building asset,” said John Walkup, co-founder of real estate analytics firm Urban Digs.
The housing investment equation is changing
Americans continue to view homeownership as a path to financial freedom.
In an October 2025 Ipsos survey of 1,085 U.S. adults, 81% said owning a home is a safe way to build wealth.
But affordability is a far greater constraint on future price increases than it was during the pandemic boom, said Mark Zandi, chief economist at Moody’s Analytics.
That’s because many buyers now face both higher home prices and higher borrowing costs than they did just a few years ago, he said.
30-year fixed mortgage rates have risen from less than 3% during the pandemic to about 6% to 7% in recent years, increasing monthly payments for new buyers.
“During the pandemic, people were used to very low interest rates and thought, oh, we’re going to go back to those rates again, but we’re not going to go back to those rates unless there’s a recession,” Zandi said.
Zandi said as home price growth slows, buyers may need to stay in their homes longer before realizing a significant increase in property value. For homeowners, equity is the difference between the value of their home and their mortgage balance. As mortgage rates rise, equity growth can slow because more of your early payments go towards interest.
“The 3% mortgage era was unusually strong,” said Wendy Newman, a real estate agent in the San Francisco Bay Area. “As home values rose rapidly, buyers were borrowing money cheaply. Today’s buyers often find mortgage rates near 7% and mortgage rate increases have slowed significantly, so the wealth creation equation is less dramatic than it once was.”
But even if home price growth slows, that doesn’t mean homeownership will stop building wealth.
“If housing wealth growth slows, the middle-class strategy of housing as a hub of wealth will lose momentum,” Walkup said. “Certainly, housing can still preserve wealth, force savings, and create stability, but it may not be able to generate the exceptional returns that owners have become accustomed to over the past decade.”
Why owning a home still helps you build wealth
One of the biggest benefits of homeownership is that buyers can use a mortgage to finance the remaining purchase, building equity with a relatively small down payment.
Bankrate calculates that even with relatively slow annual home price growth, a buyer who purchases a $500,000 home with a 10% discount and a 6.5% mortgage rate will accumulate approximately $234,000 in home equity over 10 years.
However, building home equity comes at a cost. Homeowners typically pay mortgage interest, property taxes, insurance, and maintenance costs along the way. Still, a portion of each mortgage payment goes toward building equity in your home, rather than the entire amount going towards housing costs. On the other hand, renters typically do not pay many of these costs directly.
And the longer a buyer stays in a home, the more opportunity they have to build equity through both home price appreciation and mortgage principal payments. Conversely, slower appreciation means homeownership may become less forgiving for buyers who move out in just a few years, Newman said. Sellers often face transaction costs totaling tens of thousands of dollars, reducing the profit they make on selling a home.
“When prices rise slowly, transaction costs, interest, maintenance costs, taxes and insurance take a big bite out of profits,” Newman says. “So we encourage buyers today to think as much as possible over a seven- to 10-year horizon.”
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