Home Sales Projected to Continue on Downward Trend
In 2025 and 2026, mortgage rates will likely remain above 6%. Because of this, experts are lowering their expectations for home sales
Jan. 24, 2025
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Elevated mortgage rates will continue to burden homebuyers in the coming years, putting a damper on home sales.
When looking ahead at the next two years, the outlook appears to be more of the same. According to Fannie Mae’s January economic outlook, a lack of affordable homes and the lock-in effect will continue to challenge the housing market in 2025. Affordability could improve if household incomes grow alongside home prices, but a lack of inventory and high mortgage rates remain an issue. The 30-year mortgage rate is expected to end 2025 and 2026 near 6.5% and 6.3%, respectively. This is approximately 20 and 40 basis points up from what was respectively projected in December 2024. Likewise, home sales are also expected to fall to 4.89 million in 2025 and 5.25 million in 2026.
Incorporating both an upward revision to our mortgage rate forecast and a downward revision to our home sales outlook results in a downward revision of our single-family mortgage originations forecast to $1.92 trillion in 2025 (previously $1.97 trillion) and $2.27 trillion in 2026 (previously $2.37 trillion). This follows estimated originations of $1.69 trillion in 2024.Read more
