F
annie Mae’s latest outlook shows the 30‑year fixed rate will finish 2025 at 6.5 % and fall to 6.1 % by the end of 2026—an uptick from the July forecast that suggests the return to “normal” will take a bit longer.

    The agency also projects total home sales of 4.74 million in 2025 and 5.23 million in 2026, a modest decline from earlier numbers, reflecting the dampening effect of higher rates.

    **Why the shift?**

    Two main drivers:

    * **Inflation** – CPI is now expected to hit 3.3 % by year‑end 2025, still above the Fed’s 2 % target, keeping the central bank’s policy rate high and feeding mortgage costs.

    * **Economic growth** – GDP growth for 2025 is trimmed to 1.1 %. A sluggish economy paired with persistent inflation means the Fed will likely keep rates elevated for longer.

    **What this means for you**

    * **Homebuyers** – A 6.5 % rate in 2025 is still far better than the 7‑8 % peaks of recent years. Focus on what you can control: a strong credit score, a sizable down payment to avoid PMI, and a low debt‑to‑income ratio. Buy now and refinance later when rates dip further.

    * **Existing homeowners** – With current rates around 3‑4 %, refinancing is unlikely to be worthwhile. The “golden handcuffs” keep many sellers locked in, contributing to low inventory and fewer bidding wars.

    **Market outlook**

    Higher rates will keep sales and mortgage originations lower than before, but the market is stabilizing rather than collapsing. Prices will rise more slowly, and buyers will need to be disciplined. Inventory remains tight, but homes may stay on the market longer than in the frenzy of 2021‑22.

    **New normal**

    Expect rates to hover around 6 % for the next few years—a historically average level, not the pandemic‑era lows. The housing market will settle into steadier growth, giving buyers a clearer picture of what to expect.

    **Investing in a high‑rate climate**

    With borrowing costs high, focus on cash‑flowing rental properties in robust markets. Norada can help you find turnkey deals that deliver reliable returns even when rates are elevated.

    **Contact Norada**

    (800) 611‑3060 – No obligation.

    [Get Started Now](#)

    **Also read**

    * Mortgage Rate Predictions 2026 – Berkshire Hathaway

    * Morgan Stanley’s 2025 Forecast

    * 30‑Year Fixed Forecast for the Next 5 Years

    * 15‑Year Fixed Predictions 2025‑2029

    * Will Rates Ever Return to 3 %?

    * Why 2‑3 % Rates Are Out of Reach

    * How Lower Rates Save You Thousands

    * Getting a Low Mortgage Rate

    * Will Rates Drop to 4 % Again?