F
annie Mae’s Economic and Strategic Research Group has trimmed its 2026 home‑sales outlook to a 7.3 % rise, a sharp cut from the 8.9 % projection issued in October and the 9.2 % estimate released in September. The new figure is also far below the 14 % jump predicted by the National Association of Realtors.
Mortgage rates are a central factor in the more cautious tone. The group now expects the 30‑year fixed‑rate to average 6.2 % in the first quarter of 2026, falling to 5.9 % by year‑end and remaining near that level through 2027. Freddie Mac’s latest weekly survey shows the current average at 6.26 %. The Fed’s decision at the December 9‑10 meeting could shift rates further; New York Fed President John Williams has indicated that a cut remains possible, describing policy as “modestly restrictive” with room for adjustment.
Affordability continues to be a major constraint. Oxford Economics reports that, despite modest gains, most households still find homebuying out of reach unless prices decline sharply or mortgage rates fall significantly. Lead economist Nancy Vanden Houten noted that revised price‑growth assumptions have eased the outlook, but deeper supply increases are required for widespread affordability.
Price growth is expected to stay modest. Fannie Mae’s Home Price Index is projected to rise 1.3 % in 2026, down from 4.4 % in 2024 and 2.5 % in 2025. Housing starts are forecast to decline 2.5 % in 2026, a steeper drop than the 1.5 % decline projected in October.
The earlier forecasts had shown a stronger trajectory, with the group predicting a 9.2 % jump in September and 8.9 % in October. The National Association of Realtors, meanwhile, had projected a 14 % increase in existing home sales, a figure that now appears overly optimistic given the current rate environment.
The Fed’s potential rate cut at the December meeting could influence the 30‑year fixed‑rate trajectory, but even a modest adjustment may not be enough to lift affordability to a level where a broader segment of buyers can participate.
Overall, the outlook suggests that while home sales will grow modestly, the market will face continued pressure from high rates and limited supply, keeping the pace of growth slower than recent years.
