Fannie Mae updated its housing market and economic predictions yesterday, tweaking nearly all the numbers positively in the wake of some encouraging data and federal policy shifts.

In its latest assessment of the market, the mortgage giant predicted 6.1% rates by the end of the year—a precipitous drop from the current average of 6.8%—and a smaller decrease to 5.8% by the end of 2026.

That is slightly better than Fannie Mae’s previous expectation of 6.2% in 2025, and 6% in 2026.

It is also far lower than other major housing organizations—the Mortgage Bankers Association currently anticipates rates at 6.6% in Q4 2025, and the National Association of REALTORS® predicting 6.4%.

Fannie Mae’s researchers are expecting only one or two rate cuts by the Federal Reserve, and only at the very end of the year, with inflation predicted to tick up slightly in 2025 before falling again through 2026.

The news comes as other experts and analysts have offered a less rosy assessment of the market—though fast-changing federal policy has made predictions difficult.

But some financial institutions have also recently highlighted upside positives for housing in the current economy, with Goldman Sachs last month predicting lower rates, adding that affordability relief overall could be a boon for sales, and real estate more broadly.

Fannie Mae’s updated outlook calls for a small uptick in home sales, up to 4.92 million from 4.86 million. Expectations for mortgage originations were raised fractionally from $1.98 trillion to $1.99 trillion. Expectations for new housing starts remain negative for 2025, down 2.7% from the year before.

GDP growth is also predicted to slow significantly, to 0.7%, but that is higher than Fannie Mae’s previous estimate of 0.5% for 2025.

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