Fannie Mae’s Economic and Strategic Research (ESR) Group released its Housing Forecast: December 2025, outlining expectations for key U.S. housing and mortgage market indicators through 2027. The outlook points to moderate growth in home sales and steady expansion in housing starts, even as elevated mortgage interest rates persist.
The forecast projects total housing starts near 1.3 million annually in 2026, close to the 2025 level, signaling a resilient construction sector despite ongoing affordability challenges. Single-family starts are expected to recover modestly following recent declines, while multifamily starts stabilize after uneven performance in 2025.
Fannie Mae anticipates total home sales to rise meaningfully in the coming year, with annual volumes reaching approximately 5.5 million units by late-2026 — a near 7% year-over-year increase according to quarterly estimates. Both new and existing single-family home segments are forecast to contribute to this expansion, underscoring broad market participation.
The Fannie Mae House Price Index (HPI) is projected to continue positive, though slowing, growth through 2026 and into 2027. After strong gains in recent years, HPI annual increases are expected to moderate, reflecting affordability pressures and regional market variation.
Mortgage market conditions remain a central factor in the outlook. The forecast shows the 30-year fixed-rate mortgage (FRM) averaging above 6% through much of 2025 and into 2026 before gradually easing toward the end of the forecast horizon, which could support broader buyer engagement if rates decline as projected. On the origination front, Fannie Mae estimates a rebound in total mortgage originations in 2026, driven by increased purchase activity and a sustained, albeit lower, refinancing share.
The forecast reflects ESR Group’s view that stable demand, moderate price growth, and controlled construction supply will shape the U.S. housing market in the near term, even as macroeconomic and policy conditions evolve.
