Fannie Mae Projects Strong Housing Market Recovery for 2025 and 2026 Amid Lower Mortgage Rates
- Fannie Mae projects mortgage rates will stabilize at 6.4% in 2025 and decline to 5.9% in 2026.
- Single-family mortgage originations are expected to rise from $1.85 trillion in 2025 to $2.32 trillion in 2026.
- Fannie Mae emphasizes that forecasts are based on current data but may change with new market conditions.
Fannie Mae Projects Positive Housing Market Trends for 2025 and 2026
Fannie Mae's latest Economic and Housing Outlook reveals promising projections for the U.S. housing market, indicating a robust recovery trajectory. According to the report prepared by the Economic and Strategic Research (ESR) Group, mortgage rates are expected to stabilize at 6.4% by the end of 2025, with a further decline to 5.9% in 2026. This anticipated decrease in rates is expected to stimulate both new and existing home sales, which the ESR Group forecasts will reach 4.72 million in 2025, and rise to 5.16 million in 2026. Such projections signal a significant rebound in housing activity, suggesting that the market is poised for growth as affordability improves for potential homebuyers.
In addition to sales, the outlook also highlights a substantial increase in single-family mortgage originations. Fannie Mae projects that these originations will total $1.85 trillion in 2025, escalating to $2.32 trillion in 2026. A notable aspect of this increase is the expected growth in the refinance share of these originations, which is forecasted to rise from 26% in 2025 to 35% in 2026. This growth is likely driven by the anticipated drop in mortgage rates, encouraging existing homeowners to refinance their mortgages at more favorable terms. Such activity not only benefits individual borrowers but also boosts overall market liquidity, further contributing to housing market stability.
Mark Palim, Chief Economist for the ESR Group, emphasizes that the insights provided in the report are based on current data, historical trends, and comprehensive surveys of consumers and lenders. However, he cautions that these forecasts are subject to change, as they are built on assumptions that could lead to materially different outcomes if altered. Fannie Mae encourages stakeholders to engage with their resources, including the Data and Insights page, to stay informed about ongoing market research and trends.
In light of the current housing landscape, Fannie Mae’s projections present a hopeful outlook for the coming years. The expected decline in mortgage rates coupled with rising home sales and refinancing activity indicates that the housing market may be entering a phase of recovery, which could have lasting impacts on both consumers and the broader economy. As these developments unfold, Fannie Mae continues to monitor the situation closely and adjust its strategies accordingly.