FAF Stock Forecast & Price Target

First American Financial Corp has shown a strong performance in commercial open orders, which are up 14%, reflecting broad-based growth across key sectors such as industrial and multi-family. The company’s title margin estimates have also improved, with projections increasing from 10.8% to a range of 11.5% to 12.4%, indicating enhanced profitability in its core operations. Additionally, a notable increase in the average commercial fee per file, projected to rise by 25% in 2025 following a 16% increase in 2024, combined with a favorable outlook for interest rates, positions the company well for potential growth in purchase mortgage volumes and improved investment income.

First American Financial Corp is facing a declining outlook for residential volumes, with expectations for growth in 2025 through 2027 revised downward to 9%, 6%, and 5% year-over-year, respectively. Additionally, the company's net investment income is projected to decrease moderately in the fourth quarter and further in 2026, signaling ongoing challenges ahead. The decrease in open purchase orders of 6% in October, attributed to reduced demand for new and resale homes, underscores the persistent weakness in the residential mortgage market, further contributing to the negative outlook.