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annie Mae’s September Economic and Housing Outlook projects a drop in mortgage rates to 5.9 % by the end of next year. The agency’s Economic and Strategic Research Group now expects the annualized rate of existing‑home sales to reach 4.446 million by 2026, a 9.6 % rise over the 4 million forecast for 2025. Overall home sales—new and existing—are projected to climb 9.2 % by the close of 2026, up from the 6.1 % increase predicted in February and the 6.7 % rise for existing sales.

    The outlook also signals a steady decline in 30‑year mortgage rates, which have already slipped in recent weeks. Rates are expected to fall to 6.4 % by the end of 2025 and to 5.9 % by the end of 2026. Whether these trends materialize hinges on improved financial conditions for buyers, particularly in terms of housing affordability.

    “Modest gains in affordability—through higher inventory, moderate price growth, and potential mortgage‑rate relief—could spur a gradual rebound in home sales in 2026,” said Odeta Kushi, deputy chief economist at First American. She added that lifestyle factors such as the “five D’s” (diplomas, diapers, divorce, downsizing, and death) will continue to shape housing decisions regardless of market dynamics.

    For real‑estate professionals, the last time the annualized rate for existing‑home sales hit the 4.5 million mark was October 2022, and the rate has dipped below 4 million in several months since.

    First‑time buyers remain constrained by affordability. First American’s September 23 First‑Time Home Buyer Outlook Report shows that only 26 % of homes were affordable for median renters in Q2 2025, down from 28 % in late 2024. The report, released shortly after the NFL season began, broke affordability by division: the AFC South (Jacksonville, Indianapolis, Houston, Nashville) topped the list with 26 % affordable homes, while the NFC West (Phoenix, Seattle, San Francisco, Los Angeles) lagged with just 8 %.

    However, the affordability landscape is shifting. “Mortgage rates have eased, incomes are rising, and house‑price growth is slowing—all indicators that the affordability chain may be tilting in buyers’ favor,” said Mark Fleming, chief economist at First American.