Businesses economists surveyed by the National Association of Business Economists believe there is an 80 percent probability the Federal Reserve will reduce its purchase of assets next year and 45 percent believe both purchases of Treasurys and mortgage-backed securities will be reduced this year. The Fed’s asset purchase program has been keeping mortgage rates are record lows in recent years.

In light of their expectations the purchasing program will decline next year, which is likely to raise mortgage rates substantially, the economists’ expectations for slower home price growth in 2014 relative to 2013.

Home prices are likely to grow 6% in 2013, which is an upward revision from the last NABE survey in May, when panelists suggested a 4.4% increase. Moreover, panelists suggest that home prices will grow at 4.8% in 2014, which is an increase from their 4% estimate for 2014.

They estimate that real residential investment will grow 13.8% in 2013, which is an increase from the 12.1% increase in residential investment in 2012, and that it will grow 14% in 2014. Moreover, housing starts are estimated to grow at 0.95 million units in 2013 and at 1.16 million units in 2014, which is an improvement from 0.78 million housing starts in 2012.

Regarding asset purchases, the economists believe that there is a 45% probability that the Fed will reduce both the monthly purchases of $40 billion in mortgage-backed securities and the monthly purchases of $45 billion in Treasurys and a 19% probability that these monthly purchases of Treasurys and mortgage-backed securities will not be reduced.

They believe that there is a 20% probability that the asset purchases of the $45 billion in Treasurys will be reduced, with no change in the monthly purchases of the mortgage-backed securities; and a 15% probability that the asset purchase of mortgage-backed securities will be reduced, but that the purchases of Treasurys will be unchanged.