Although Fannie Mae’s expectations for new single-family home building declined for the majority of 2026, its March mortgage rate forecasts were more bullish than its February Housing Forecast. It’s a “two-edged sword,” although lower mortgage rates make housing more accessible, fewer homes on the market can lead to increased competition and higher home prices.
According to Fannie Mae’s March Housing Forecast, the average 30-year fixed mortgage rate will stay at 6% for the first quarter, which ends in a few weeks, but it will be lower than 6% for the remainder of 2026 and 2027.
According to Fannie Mae’s prediction for 2026, the mortgage rate will reach 5.9% in Q2, 5.8% in Q3, and 5.7% in Q4. In 2027, the group predicted that the rate will fluctuate between 5.6% and 5.7%. As previously stated, these forecasts outperformed the figures from the GSE’s February Housing Forecast. Fannie Mae predicted in February that the average 30-year fixed mortgage rate will be 6.1% in Q1 and Q2 of 2026 and 6% through the end of 2027.
Key Findings:
- Fannie Mae’s March Housing Forecast predicts lower mortgage rates.
- Fewer single-family home construction starts are expected in 2026, but more are projected in 2027.
- Lower mortgage rates aid affordability, but limited inventory keeps home prices high.
What Has Changed?
In order to comprehend, consumers must examine Fannie Mae’s overall Economic projection, which is another monthly projection.
The Fannie Mae March Economic Forecast projected less GDP growth than its February Economic Forecast for the majority of 2026 and 2027. Growing GDP is an indicator of a more robust economy. When the US economy is doing well, mortgage rates usually rise; when it is not, they usually fall. Fannie Mae’s forecasts for slower GDP growth point to a weaker economy over the next years, which would result in lower mortgage rates.
Further, the 10-year Treasury yield was lower in the March Economic Forecast than in the February Forecast. A lower yield would probably result in lower home loan rates because the 30-year fixed mortgage rate tracks the 10-year yield more closely than any other index.
Compared to its February report, Fannie Mae’s March Housing Forecast projected fewer single-family home construction starts for the first three quarters of 2026. According to the organization’s most recent forecast, single-family housing starts will decline by 6.2% annually.
However, compared to February, the March survey predicted higher single-family building for Q4 2026 and the entirety of 2027. Fannie Mae predicted a 2.4% rise in single-family homes beginning in 2027 last month. It predicted a 5.1% gain this month.
If fewer homes are constructed, there will be less available housing and more demand from buyers than there is supply. Home prices typically rise as a result. Conversely, prices are more stable when inventory increases.
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