Fannie Mae has once again revised its housing market forecast, with rising mortgage rates at the forefront of its updated projections. The government-sponsored enterprise now predicts that the average 30-year fixed mortgage rate will hit 6.7% by the end of 2024, up from its previous forecast of 6%. While rates are expected to ease slightly to 6.4% by 2025, affordability will continue to be a challenge, especially for first-time homebuyers, as higher borrowing costs persist.

This upward revision in mortgage rates is the key factor behind Fannie Mae’s updated outlook, which anticipates a decline in home sales to 4.71 million in 2024—down from the previous forecast of 4.77 million. The downward trajectory continues in 2025, with sales expected to dip further to 4.93 million, compared to an earlier estimate of 5.24 million. However, the forecast does point to a modest recovery in the housing market by 2026, with home sales projected to rise to 5.68 million as mortgage rates stabilize and affordability improves.