Fannie Mae ESR Group 2025 Housing Market Outlook Released

Recently, Fannie Mae’s Economic and Strategic Research (ESR) Group shared some insights into the 2025 housing market. They predict that affordability and what they term the “lock-in effect” will keep the housing market relatively quiet in the coming year, with existing-home sales expected to only see a slight increase from their current multi-decade lows.

While the housing market might be stagnant, the overall economy is poised to continue growing steadily and even outpacing the norm through 2026. This growth comes despite ongoing high inflation and policy uncertainties.

Fannie Mae’s experts offered five key predictions for the housing market in 2025:

1. Mortgage rates are anticipated to dip slightly but will likely hover above 6%, with some expected fluctuations.
2. Existing-house sales will mostly stay near historic lows, but success might vary depending on location.
3. New home sales, on the other hand, are expected to be a bright spot, provided there’s room for new constructions.
4. National home prices are projected to increase at a slower rate.
5. Multifamily housing is expected to maintain the status quo for the time being.

In comments included in the report, Mark Palim, Fannie Mae’s Senior Vice President and Chief Economist, emphasized that 2025 might mirror 2024 in terms of affordability challenges, with mortgage rates remaining high, price growth slowing down a bit, but still showing positive trends, and housing supply remaining tight.

However, there might be opportunities for home buyers during periods of lower mortgage rates offering some relief. The local market conditions are expected to play a significant role, with regions like the Sun Belt possibly seeing more robust activities compared to supply-constrained areas like the Northeast.

Despite the forecasted challenges, nominal wage growth is expected to outpace home price growth for the first time in over a decade, offering some hope for potential homebuyers looking for relief.

FEA compiles the Wood Markets News from multiple sources to provide up-to-date insights into the forest product markets. It’s important to note that the opinions expressed in these articles do not necessarily reflect those of FEA.