Existing-Home Sales Projected to See Minimal Growth in 2025

Despite previously having a more positive outlook for 2025, Fannie Mae now predicts existing-home sales will rise by just 4% in 2025, following a 2024 performance expected to hit a nearly 30-year low. This revised outlook is down from the previously projected 11% increase, due to recent spikes in mortgage rates. However, sales are still expected to rebound in 2026, with a forecasted increase of approximately 17%. New-home sales are also projected to grow steadily in 2025 and 2026 as home builders continue to offer buyer incentives.

“Long-run interest rates have moved upward over the past couple months following a string of continued strong economic data and disappointing inflation readings,” said Mark Palim, Fannie Mae Senior Vice President and Chief Economist. “To the extent that the recent run-up in rates has been driven by market expectations of stronger economic growth, we think this bodes well for the labor market outlook and home purchase demand. However, we expect inventories of homes added to the market, and therefore sales of existing homes, to remain subdued through next year, as the higher mortgage rate environment is likely to strengthen the ongoing lock-in effect. How these competing forces balance out is currently an open question, but for now we continue to expect affordability to remain the primary constraint on housing activity through our forecast horizon.” Read more