The Fannie Mae Economic and Strategic Research (ESR) Group’s latest Economic and Housing Outlook for May 2025 presents an optimistic forecast for the housing market. The report projects single-family home sales reaching approximately 4.92 million units by the end of 2025, with existing home sales accounting for an estimated 4.24 million of these transactions. This upward revision is partly due to a predicted decrease in mortgage rates, now expected to be 6.1% by the end of 2025 and further declining to 5.8% in 2026.
Economic growth is also on the rise, with real GDP forecasted to expand by 0.7% in 2025, followed by a stronger growth of 2.0% in 2026 when measured on a quarter-over-quarter basis. This growth outlook slightly surpasses previous projections of 0.5% for 2025 and 1.9% for 2026.
In terms of inflation, the Consumer Price Index (CPI) is anticipated to elevate by 3.5% in Q4 of 2025, while the core CPI remains stable with a prediction of 2.8% for 2026, marking a marginal decrease in 2025 from earlier forecasts.
Additionally, Fannie Mae has adjusted its projections for mortgage originations, forecasting an increase from $1.98 trillion to $1.99 trillion for 2025, and from $2.33 trillion to $2.38 trillion for 2026. These shifts indicate a strengthening financial environment and may signal more favorable conditions for prospective homebuyers.
Overall, while the housing market experiences volatility, the outlook for 2025 is beginning to look more promising, presenting potential opportunities for both buyers and sellers. The expected decline in interest rates combined with economic growth could foster an improving real estate landscape.