Home prices rose 3.3% year over year—modest gains expected into 2026
Fannie Mae’s latest Home Price Index (FNM-HPI) showed United States single-family home prices climbing 3.3% year over year in the third quarter of 2025, underscoring a market that has weathered higher mortgage rates and persistent affordability challenges.
The index, which excludes condos and tracks repeat transactions nationwide, posted a 0.6% seasonally adjusted gain from the previous quarter.
Fannie Mae’s Economic and Strategic Research (ESR) group now expects home price growth to be 2.5% in 2025 and 1.3% in 2026 on a Q4/Q4 basis, compared to 2.8% and 1.1% in their prior forecast.
Mortgage rates forecast to decline
The ESR Group slightly lowered its mortgage rate projections, now expecting the 30-year fixed rate to end 2025 at 6.3% and fall to 5.9% by the end of 2026.
The modest decline is expected to lift single-family mortgage originations to $1.88 trillion this year, up from the prior estimate of $1.85 trillion.
The Mortgage Bankers Association (MBA), by comparison, projected $2 trillion in single-family origination volume for 2025, as the industry braces for a year shaped by shifting rates, evolving affordability, and regional disparities in home prices.
An independent Fannie Mae and Freddie Mac IPO could happen in early 2026, depending on President Trump’s decision, according to Federal Housing director Bill Pulte.https://t.co/IbyKXQyLFY
— Mortgage Professional America Magazine (@MPAMagazineUS) October 24, 2025
Home sales and broader economic context
Fannie Mae revised its 2025 home sales forecast upward to 4.74 million units, with 2026 unchanged at 5.16 million.
Meanwhile, the ESR Group raised its gross domestic product (GDP) growth outlook to 1.9% for 2025 and 2.3% for 2026.
Inflation is projected to ease, with the Consumer Price Index (CPI) expected at 2.9% Q4/Q4 in 2025, down from the previous 3.1% forecast.
Looking ahead, the consensus is for modest home price appreciation and a gradual recovery in sales and originations as rates ease. While the pace of home price growth is slowing, the market remains fundamentally sound, with lower mortgage rates on the horizon expected to support a rebound in activity.
Fannie Mae released its new data as it made changes to its leadership, naming chief operating officer Peter Akwaboah as acting CEO and appointing John Roscoe and Brandon Hamara as co-presidents.
Chairman of the board Bill Pulte said Akwaboah would lead the company while the search for a permanent CEO continues.
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