HousingWireHousingWire
Fannie Mae upwardly revised forecasts in its May 2025 Economic and Housing Outlook, reflecting modest improvements in economic growth expectations, as well as mortgage rates and home sales projections.
The government-sponsored enterprise now expects real gross domestic product (GDP) growth of 0.7% in 2025 and 2% in 2026 on an annualized basis. These figures are up from its previous growth estimates of 0.5% and 1.9%, respectively.
Despite the improved growth outlook, inflation expectations remain largely unchanged. The Consumer Price Index (CPI) is projected to rise 3.5% in 2025, consistent with last month’s forecast.
Core CPI is expected to rise 3.8% during the year, down slightly from a prior estimate of 3.9%, while the 2026 projection remains at 2.6%.
Fannie Mae also lowered its forecast for mortgage rates.
The 30-year fixed-rate mortgage rate is now projected to end 2025 at 6.1% and decline further to 5.8% by the end of 2026. Previous estimates had rates at 6.2% and 6%, respectively.
The outlook for home sales has improved slightly. Total existing- and new-home sales are now expected to reach 4.92 million in 2025 — up from the prior forecast of 4.86 million.
Mortgage originations are also set to rise modestly. Fannie Mae now forecasts total origination volume of $1.99 trillion in 2025 and $2.38 trillion in 2026, compared to last month’s estimates of $1.98 trillion and $2.33 trillion.
