The September 2025 Economic and Housing Outlook Fannie Mae’s Economic and Strategic Research (ESR) Group found that mortgage rates are projected to end 2025 at 6.4% and 2026 at 5.9%.
The ESR Group has also forecast single-family mortgage originations to remain at $1.85 trillion for 2025, while rising to $2.32 trillion in 2026 from its previously estimated total of $2.26 trillion.
Fannie Mae’s ESR Group, led by SVP and Chief Economist Mark Palim, studies current data, analyzes historical and emerging trends, and conducts surveys of consumers and mortgage lenders to inform forecasts and analyses on the economy, housing, and mortgage markets.
In addition to its September 2025 forecast of the rate environment and originations, the ESR Group analyzed gross domestic product (GDP), Consumer Price Index (CPI), and home sales outlook, finding that:
- The ESR Group revised its real GDP growth outlook for 2025 to 1.5%, previously 1.1%, and for 2026 to 2.1% from 2.2%.
- The ESR Group expects the CPI to rise 3.1% Q4/Q4 in 2025, compared to its August forecast of 3.3%. The CPI outlook for 2026 is 2.6%, unchanged from its prior forecast. Core CPI is expected to rise 3.2% Q4/Q4 in 2025 (3.3% previously), and 2.7% in 2026 (2.6% previously).
- The ESR Group’s total home sales outlook for 2025 was revised to 4.72 million, compared to 4.74 million previously. Its 2026 home sales projection is 5.16 million, compared to 5.23 million previously.
In early August, the 30-year fixed-rate mortgage (FRM) as reported by Freddie Mac began to drop, beginning the month at 6.72% and falling to 6.56% to close out the month, bottoming out to a 10-month low. Just last week, the 30-year FRM averaged 6.26% as September comes to a close. A year ago at this time, the 30-year FRM averaged 6.09%.
Just last week, the Federal Reserve lowered the target range for the federal funds rate by 0.25 percentage points to 4% to 4.25% at the conclusion of its Federal Open Market Committee (FOMC) meeting. This marked the first time in 2025 that the Fed has cut rates, and put an end to a streak of five consecutive meetings where the federal funds rate was held steady at 4.25%-4.50%.
Fallout from the Fed’s rate cuts actually caused mortgage rates to edge slightly higher, as markets were forced to adjust to the Federal Reserve’s outlook.
“Even with this week’s uptick, mortgage rates remain near 11-month lows, creating opportunities for both buyers and homeowners considering a refinance,” said Realtor.com Senior Economic Research Analyst Hannah Jones. “For buyers, the current rate environment is delivering a meaningful boost to affordability. At today’s levels, the monthly payment on a typical home is appreciably lower than it would have been at last year’s highs. That shift can make the difference for first-time buyers stretching their budgets, particularly in high-cost metros.”
Redfin reported there were an estimated 35.2% more home sellers than buyers in the U.S. housing market in August (or 505,915 more, in numerical terms). June 2025 was the only month in Redfin’s records dating back 2013 when sellers outnumbered buyers by a greater percentage—36.3%. There were an estimated 1.44 million homebuyers in the U.S. housing market in August—the lowest level in records dating back to 2013 aside from the onset of the pandemic, when the housing market ground to a halt.
Click here for more on the September 2025 Economic and Housing Outlook from Fannie Mae’s Economic and Strategic Research (ESR) Group.
