Mortgage Rates Expected to Move Lower in 2025 and 2026

Existing Home Sales Forecast Upgraded Slightly on Lower Rate Outlook

WASHINGTON, March 28, 2025 /PRNewswire/ -- Mortgage rates are now expected to end 2025 and 2026 at 6.3 percent and 6.2 percent, respectively, downward revisions of three-tenths for each, according to the March 2025 commentary from the Fannie Mae (OTCQB: FNMA) Economic and Strategic Research (ESR) Group. The lower mortgage rate outlook resulted in a small upward revision to the ESR Group's existing home sales outlook in 2025, though expectations for total home sales remain subdued. On a Q4/Q4 basis, real gross domestic product (GDP) is now expected to be 1.7 percent in 2025 and 2.1 percent in 2026, modest downward revisions owing to weaker incoming data and greater clarity on trade policy.

"We expect the recent pullback in mortgage rates will provide a small boost to home sales this year," said Mark Palim, Fannie Mae Senior Vice President and Chief Economist. "While our latest forecast calls for a period of modestly slower economic growth, historically, interest rates have been the most important driver of home sales. We think mortgage rates will move even lower within the next quarter and ultimately close the year at approximately 6.3 percent, which could be low enough to generate some extra sales from any would-be buyers still waiting on the sidelines."

Visit the Economic and Strategic Research site at fanniemae.com to read the full March 2025 Economic Outlook, including the Economic Developments Commentary, Economic Forecast, and Housing Forecast. To receive e-mail 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 consumer and mortgage lender groups to provide forecasts and analyses on the economy, housing, and mortgage markets.

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