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Economists are predicting that mortgage rates will remain high this year, keeping potential homebuyers and sellers cautious and impacting sales numbers. The forecast for 2025 sales remains low, reflecting the recent increase in long-term rates.
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Despite a slight decrease from a recent high, mortgage rates have risen significantly since last year, impacting affordability and home sales. Forecasts suggest a gradual decrease in rates, but the market remains challenging for buyers.
Fannie Mae Chief Economist Mark Palim expressed concerns about the impact of higher rates on homebuyers and the housing market, predicting another year of sluggish sales due to affordability constraints.
While the market may feel similar to 2024, there is hope for rising incomes and more competitive pricing in some housing markets, offering potential opportunities for buyers.
Fannie Mae’s revised forecast for 2025 predicts a slight decrease in home sales compared to previous projections, reflecting the challenges posed by higher mortgage rates.
Higher rates here to stay?
Source: Fannie Mae and Mortgage Bankers Association forecasts.
Forecasts from Fannie Mae and the MBA suggest that rates may not decrease significantly in the near future, impacting the spring homebuying season. Despite some fluctuations, rates are expected to remain relatively high in the coming months.
The recent jobs report and inflation concerns have influenced investor expectations about future rate cuts, with uncertainty surrounding the Fed’s decisions. President Trump has expressed his views on interest rates, highlighting the complex factors affecting mortgage rates.
While there is hope for some stabilization in rates, the market remains challenging for buyers and sellers, with affordability and supply issues continuing to impact the housing market.
The bond market’s recent divergence is a result of updated expectations for fewer rate cuts in the future, according to Fannie Mae economists. They now predict that the Fed will lower the short-term federal funds rate by 25 basis points in June and September, and then maintain it at that level. This shift in forecast is influenced by the rise in rates, changing economic conditions, and a shift towards stronger growth. As a result, Fannie Mae has revised their previous predictions for rate cuts in 2026. To ensure the preservation of the original HTML tags, images, HTML header, and key points, we will seamlessly integrate the content into a WordPress platform while maintaining its unique nature.
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