Fannie Mae Lowers Mortgage Rate and Home Price Growth Outlook

Author: Evelyn Baker Updated: 07-24-2025 09:14 AM

Fannie Mae Adjusts Economic Predictions

Fannie Mae is making notable adjustments to its economic and housing forecasts, which will significantly impact the mortgage landscape in the coming years. According to updated estimates, mortgage rates are expected to wrap up at 6.4 percent by the end of 2025 and decrease further to 6.0 percent in 2026. This is a marked reduction from previous expectations of 6.5 percent and 6.1 percent, indicating a softer outlook for the mortgage market.

Home Price Growth Projections

Alongside the changes in mortgage rates, Fannie Mae's Economic and Strategic Research (ESR) Group has also revised its home price growth projections. For 2025, the forecast anticipates a modest annual growth rate of 2.8 percent, which is a downward revision from the previously projected 4.1 percent. The anticipated growth for 2026 has also been lowered to just 1.1 percent, compared to an earlier estimate of 2.0 percent.

Impact on Home Sales

These revised projections for home prices and mortgage rates are expected to influence buyer behavior and overall housing market dynamics. Fannie Mae forecasts total home sales to reach approximately 4.85 million units in 2025 and 5.35 million units in 2026. This comes in light of economic shifts that affect affordability and the demand for housing.

Factors Influencing Market Conditions

The changing economic landscape is a result of various factors, including socioeconomic trends, market demand, and inflationary pressures. Consumers and prospective homeowners are likely to adjust their purchasing strategies based on these revised forecasts. Fannie Mae's insights highlight the complexities that come with economic forecasts, especially in the housing industry.

Future Outlook

Understanding these adjustments is critical for stakeholders in the housing market, including buyers, sellers, and investors. As mortgage rates remain a pivotal element in home purchasing decisions, potential homeowners might find the current forecasts encouraging, especially with the decrease in projected rates leading into 2026.

The Role of Fannie Mae's ESR Group

Fannie Mae's Economic and Strategic Research Group, led by Chief Economist Mark Palim, plays a crucial role in informing the industry about current data trends and emerging forecasts. By analyzing broad economic indicators, the group aims to provide valuable insights into housing and mortgage markets, thus allowing stakeholders to navigate changes effectively.

Frequently Asked Questions

What are the updated mortgage rate forecasts by Fannie Mae?

The revised forecasts indicate mortgage rates ending at 6.4 percent in 2025 and 6.0 percent in 2026.

How has home price growth been projected to change?

Home price growth is now projected at 2.8 percent for 2025, a reduction from 4.1 percent, and 1.1 percent for 2026, down from 2.0 percent.

What is the expected total home sales figure?

Total home sales are forecasted to reach 4.85 million units in 2025 and 5.35 million units in 2026.

Who leads Fannie Mae's Economic and Strategic Research Group?

Mark Palim serves as the Chief Economist and leads the Economic and Strategic Research Group.

What are the implications of these forecasts?

The forecasts suggest changing buyer behavior, as lower mortgage rates and modest home price growth may positively impact home buying decisions.

About The Author

Greetings, I'm 32-year-old author and financial specialist Evelyn Baker. My introduction into the financial industry started with an economics degree and continued with a wealth of experience in wealth management and financial consulting. My great passion over the years has been assisting people and companies in making wise, well-informed decisions to reach their financial objectives.

My goal with writing is to simplify difficult financial ideas into understandable, doable guidance. My goal in writing many books and articles is to make personal finance understandable to everyone, irrespective of their experience or background. I want to give readers the information they need to take charge of their financial futures, from investing and retirement planning to budgeting and saving.

Along with my writing, I lead webinars and workshops where I provide doable advice and methods for achieving financial success. To reach a larger audience, I also frequently contribute to financial blogs and publications. My method is always to offer doable, real-world guidance that can actually improve people's lives.

Aside from my job, I like to cook, travel, and experience other cultures. I work hard to apply my belief in the value of a balanced life to my financial counsel. My goal in working is to encourage and enable people to succeed financially so they may lead the best lives possible.

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