Brighter Days Ahead for the Housing Market? Fannie Mae Thinks So

Brighter Days Ahead for the Housing Market? Fannie Mae Thinks So

Good news for buyers and sellers alike: Fannie Mae has updated its 2025 housing market outlook — and the forecast is looking a little sunnier.

In its May economic report, the mortgage giant raised its projection for total U.S. home sales in 2025 to 4.92 million. That’s a step up from April’s forecast and reflects a 3.6% increase over 2024, even if it’s slightly below March’s more optimistic number.

What’s driving the bump? Lower expectations for mortgage rates.

Earlier this year, Fannie Mae's economists projected that 30-year fixed mortgage rates could hover around 6.8% by the end of 2025. Now, they’re dialing that back to 6.4% — the most optimistic rate estimate they’ve offered all year.

That shift could be a game-changer. With rates having jumped from pandemic-era lows of around 2.6% to over 7% in recent years, many homeowners have felt "locked in" by their low mortgage payments, reluctant to sell and face significantly higher rates on a new loan. This so-called “rate lock” effect has kept a lid on housing inventory, making it tougher for buyers to find options.

But with rates expected to ease, Fannie Mae economists believe more homeowners might finally be ready to list — loosening up inventory and driving more sales in the process.

Of the projected 4.92 million total sales in 2025, 4.24 million are expected to come from existing homes — a 4.4% increase from 2024 and the strongest forecast we've seen so far this year for the resale market.

As Fannie Mae’s Chief Economist Mark Palim noted late last year, “heightened mortgage rate volatility may present opportunities for would-be homebuyers to take advantage of temporary lows.” That still holds true — and with rates potentially trending downward, we could see renewed activity from both sides of the market.