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annie Mae's latest report suggests the housing market will remain sluggish until 2025, but there are signs of improvement on the horizon for 2026. The company's Economic and Housing Outlook predicts a slower-than-expected real estate market in 2025 due to economic uncertainty and potential homebuyers holding back.

    Mortgage rates are expected to decline gradually throughout the year, reaching 6.2% by the end of 2025. This would lead to an annualized rate of existing home sales ranging from 4.15 million to 4.26 million by the end of the year. However, a more significant increase is anticipated in 2026.

    The forecast also downgrades expectations for new home sales, with an annualized rate of 682,000 predicted by the end of the year, compared to March's forecast of 730,000. Consumer sentiment has become a key factor driving the forecast revisions, with Fannie Mae's housing sentiment index dropping to 68.1 in March and 77% of consumers believing it's a bad time to purchase a home.

    Despite these challenges, Fannie Mae experts are optimistic about market conditions improving in 2026. The April forecast predicts an annualized rate of 4.56 million by the end of next year, with mortgage rates remaining around 6%.