Fannie Mae lowered its mortgage-rate forecasts after the Federal Reserve’s recent rate cuts, putting the expected average rate for 30-year fixed-rate mortgages at 6.4% at year-end 2025 and 5.9% at year-end 2026.  

Its previous forecast called for the average 30-year fixed to be 6.5% at the end of 2025 and 6.1% at the end of 2026. 

At the same time, Fannie Mae, via its Economic and Strategic Research Group, lowered its total home-sales outlooks for fourth quarter 2025 and 2026 to 4.72 million and 5.16 million from 4.74 million and 5.23 million, respectively. 

Fannie Mae also tweaked its expectations for single-family mortgage originations to $1.85 trillion and $2.32 trillion for 2025 and 2026 from $1.85 trillion and $2.26 trillion, respectively. 

Housing starts are expected to decline 1.1% from 1,367,000 in 2024 to 1,352,000 in 2025 and decline 0.5% from 2025 to 1,345,000 in 2026. 

Fannie Mae expects inflation to come slightly lower in 2025 with a 3.2% rise in the core Consumer Price Index compared to a previous forecast of a 3.3% gain. The core CPI is expected to rise 2.7% in 2026 compared to a previous estimate of 2.6%.