Mortgage originations are also expected to tick closer to $2 trillion this year – and well above that in 2026
A projected fall in mortgage rates this year and next is set to boost single-family home sales across the US by more than originally expected, according to Fannie Mae’s latest housing outlook report.
The government-sponsored enterprise (GSE) said Wednesday that it projected 4.92 million single-family sales by the end of this year, higher than its earlier forecast of 4.86 million units, with mortgage rates now expected to slide to 6.1% by the beginning of January and 5.8% at year-end 2026.
Fannie’s last projection on the rates front was an average 30-year fixed rate of 6.2% this year and 6.0% in 2026. Mortgage originations are also set to climb higher – to $1.99 trillion this year, up from the earlier forecast of $1.98 trillion, and $2.38 trillion next year (compared with a previously projected $2.33 trillion).
Meanwhile, Fannie’s expectations for the US economy are brightening slightly. GDP is set to increase by 0.7% this year and 2.0% in 2026, the GSE said, a gain from its earlier projections of 0.5% and 1.9%.
Which way is the tide turning in the US housing market?
The improved outlook arrives despite concern that the Trump administration’s trade policies and series of deep cuts to federal institutions including Fannie and fellow GSE Freddie Mac could hinder US housing market growth.
Melissa Cohn of William Raveis Mortgage says China holds leverage in US trade talks through its Treasury holdings, but a market crash remains unlikely. A 90-day tariff truce has not eased rate uncertainty. https://t.co/WnMAYQP7UU
— Mortgage Professional America Magazine (@MPAMagazineUS) May 15, 2025
Last week, a Bloomberg Intelligence report suggested plunging credit availability for mortgages backed by Fannie and Freddie, and the removal of first-time homebuyer and downpayment assistance programs, could freeze some hopeful buyers out of the market.
But a spokesperson at the Federal Housing Finance Agency (FHFA), which oversees the GSEs, torched that analysis and said Fannie and Freddie “have great robust affordability programs” while pointing the finger at the Biden administration for higher housing and mortgage costs.
‘Early signs of a correction’ already at play, says real estate CEO
Real estate investment and development company First American Properties said this week that surging housing inventory could signal an impending further cooldown across many regions.
Over 959,000 US homes are currently listed for sale, an increase of more than 30% from the same time last year, and First American Properties chief executive officer Michael Eisenga suggested a recovery in sales activity isn’t likely yet.
“The US housing market is no longer in the high-flying territory we’ve seen over the past few years,” he said. “What we’re seeing now, particularly with rising inventory and declining pending sales, are the early signs of a correction already playing out in several markets.”
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