Mortgage Rate and Home Price Growth Forecasts Revised Lower

Rhea-AI Summary

Fannie Mae (OTCQB: FNMA) has revised its mortgage rate and home price growth forecasts downward in its July 2025 Economic and Housing Outlook. The ESR Group now expects mortgage rates to reach 6.4% by end-2025 and 6.0% by end-2026, down from previous forecasts of 6.5% and 6.1% respectively.

Annual home price growth projections have also been lowered to 2.8% for 2025 and 1.1% for 2026, compared to earlier forecasts of 4.1% and 2.0%. Total home sales are anticipated to reach 4.85 million units in 2025 and 5.35 million units in 2026.

Positive

• Mortgage rates forecast revised lower for both 2025 and 2026
• Home sales expected to increase from 4.85M units in 2025 to 5.35M units in 2026

Negative

• Home price growth forecasts significantly reduced for both 2025 and 2026
• Housing market showing signs of slower growth momentum

WASHINGTON, July 24, 2025 /PRNewswire/ -- Mortgage rates are expected to end 2025 and 2026 at 6.4 percent and 6.0 percent, respectively, downward revisions compared with last month's forecast of 6.5 percent and 6.1 percent, according to the July 2025 Economic and Housing Outlook from the Fannie Mae (OTCQB: FNMA) Economic and Strategic Research (ESR) Group. The ESR Group also updated its home price growth forecast this month and now projects annual home price growth, on a Q4/Q4 basis, of 2.8 percent in 2025 and 1.1 percent in 2026. These are downward revisions compared with the previously projected 4.1 percent and 2.0 percent. Total home sales are forecast at 4.85 million units in 2025 and 5.35 million units in 2026.

Visit Fannie Mae's Data and Insights page to read the full July 2025 Economic and Housing Outlook, including the Economic Developments Commentary, Economic Forecast, and Housing Forecast. To receive email updates with other housing market research from Fannie Mae's Economic and Strategic Research Group, please click here.

Opinions, analyses, estimates, forecasts, beliefs, and other views of Fannie Mae's Economic and Strategic Research (ESR) Group included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR Group bases its opinions, analyses, estimates, forecasts, beliefs, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, beliefs, and other views published by the ESR Group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.

About the ESR Group
Fannie Mae's Economic and Strategic Research Group, led by Chief Economist Mark Palim, studies current data, analyzes historical and emerging trends, and conducts surveys of consumers and mortgage lenders to inform forecasts and analyses on the economy, housing, and mortgage markets.

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SOURCE Fannie Mae

FAQ

What are Fannie Mae's revised mortgage rate predictions for 2025 and 2026?

Fannie Mae forecasts mortgage rates to end at 6.4% in 2025 and 6.0% in 2026, revised down from previous forecasts of 6.5% and 6.1% respectively.

How much home price growth does FNMA expect in 2025-2026?

Fannie Mae projects annual home price growth of 2.8% in 2025 and 1.1% in 2026, down from previous forecasts of 4.1% and 2.0%.

What is Fannie Mae's forecast for total home sales in 2025 and 2026?

Fannie Mae forecasts total home sales to reach 4.85 million units in 2025 and increase to 5.35 million units in 2026.

How much did FNMA lower its home price growth forecast compared to previous predictions?

Fannie Mae reduced its home price growth forecast by 1.3 percentage points for 2025 (from 4.1% to 2.8%) and by 0.9 percentage points for 2026 (from 2.0% to 1.1%).