Mortgage rates are forecast to end the year slightly lower than June estimates, according to Fannie Mae’s July 2025 Economic and Housing Outlook. Rates are now expected to end 2025 at 6.4%, a downward revision from the previous 6.5% projection.

Rates for 2026 are also projected to fall slightly, with the new forecast showing 6% instead of the original 6.1% estimate.

While rate predictions are slightly lower, so too is the home price growth forecast. The report, released by Fannie Mae’s Economic and Strategic Research (ESR) group, reduced its annual home price figures (on a Q4/Q4 basis) to 2.8% growth for 2025, down from its original projected 4.1% growth. Its 2026 growth numbers also fell from 2% growth to a new forecast of 1.1% annual home price growth, as measured by the Fannie Mae Home Price Index.

The report forecasted total home sales at 4.85 million units in 2025 (up from previous estimate of 4.82 million) and 5.35 million units in 2026 (increased from 5.25 million).

Another key takeaway from the report was a rise in the forecast for mortgage originations, from $1.9 trillion to $1.92 trillion in 2025, and from $2.28 trillion to $2.34 trillion in 2026.

Fannie Mae also forecast the Consumer Price Index (CPI) to rise 3% in 2025, down from its June estimate of 3.2%. The outlook for 2026 is 2.7%, down from 2.8%. Core CPI is expected to rise 3.2% in 2025, down from previous 3.3% estimate, and 2.7% in 2026, unchanged from its prior forecast.

Fannie Mae’s ESR group is led by Chief Economist Mark Palim. It studies current data, analyzes historical and emerging trends, and conducts surveys of consumers and mortgage lenders to inform forecasts and analyses on the economy, housing and mortgage markets.