Could the tide finally be turning for the housing market?
After a long period defined by high interest rates, limited inventory, and affordability challenges, new signals are emerging that suggest a shift may be underway.
A recently updated forecast from Fannie Mae is pointing to conditions that could bring some long-awaited relief to buyers—and potentially spur more movement across the market.
The changes are subtle, but they could mark the beginning of a slow and steady rebound.
Time to make a move? Let us find the right mortgage for youFannie Mae lowers rate expectations
According to Fannie Mae’s March 2025 Economic Outlook, mortgage rates are now projected to end the year lower than previously expected.
The organization’s Economic and Strategic Research (ESR) Group adjusted its forecast downward, anticipating rates will settle at 6.3% by the end of 2025 and 6.2% by the end of 2026. Those revisions led to a slight upgrade in projected existing home sales for the year.
While the overall outlook remains cautious, the change reflects growing optimism that lower borrowing costs could help unlock demand that’s been sitting on the sidelines.
A small boost with big implications
“Historically, interest rates have been the most important driver of home sales,” said Mark Palim, Fannie Mae Senior Vice President and Chief Economist. “We expect the recent pullback in mortgage rates will provide a small boost to home sales this year.”
Though modest, that boost could prove meaningful in a market where affordability has remained one of the biggest barriers.
Lower rates could also motivate more current homeowners—many of whom have been reluctant to sell—to consider listing their homes, easing some of the inventory crunch.
Broader economic signals
In addition to the housing outlook, Fannie Mae revised its GDP growth projections downward.
Real gross domestic product is now expected to increase by 1.7% in 2025 and 2.1% in 2026—a reflection of weaker-than-expected data and new clarity on trade policy.
While slower economic growth may seem like a concern, it can also help cool inflation, reducing pressure on the Federal Reserve and supporting a longer-term path to lower mortgage rates.
What buyers should know
The forecast doesn’t suggest a dramatic market turnaround. But it does hint at a window of opportunity for prospective home buyers—particularly those who have been priced out or hesitant to act in recent years.
With borrowing costs expected to ease and sales activity slowly picking up, the second half of 2025 may offer a more favorable entry point than buyers have seen in some time.
Patience may still be required—but for the first time in a while, there are signs the waiting could start to pay off.
