Getting a mortgage below 6% might not be a pipe dream much longer. Fannie Mae just released fresh projections that have the housing market buzzing — and if you’ve been waiting on the sidelines, it’s time to pay attention.
According to TheStreet, Fannie Mae revised its mortgage rate forecast in May 2025, now predicting rates will drop to 6.1% by the end of this year and fall further to 5.8% by the end of 2026.
That marks a sharp shift from earlier forecasts, which had rates climbing toward 7%, and signals a potentially pivotal moment for homebuyers looking to make their move.
Why Fannie Mae’s turning bullish
Several factors are converging to create this sunnier outlook. Housing inventory is finally loosening up after years of scarcity.
More homes hitting the market means sellers can’t call all the shots like they did during the pandemic buying frenzy. The economy is also showing signs of resilience, with improved GDP forecasts giving lenders more confidence to ease their grip on rates.
Perhaps most telling? According to TheStreet, Fannie Mae’s Home Purchase Sentiment Index ticked up in April for the first time since 2024. While overall buyer sentiment remains down year-over-year, any upward movement feels noteworthy after months of relentless pessimism.
The Federal Reserve began cutting rates back in September, but mortgage relief hasn’t materialized as quickly as many hoped.
Political uncertainty and skittish financial markets have kept mortgage rates stubbornly elevated despite the Fed’s efforts. Still, TheStreet reports that Fannie Mae’s economists believe we’re finally rounding the bend — signaling that better borrowing conditions could be just ahead.
What happens to home prices when rates fall
Here’s where it gets interesting. As mortgage rates ease and inventory builds, home prices begin to soften. TheStreet reports that economists now expect home prices to dip about 1% year-over-year by the fourth quarter, as sellers increasingly outnumber buyers in many markets.
Not every region will feel the drop, though. The Northeast and Midwest — where demand consistently outpaces supply — will likely hold steady. But in many parts of the country, we’re heading toward what experts call the strongest buyer’s market since 2013.
Redfin analysts report that buyers could gain negotiating power they haven’t had in years. With more options and increasingly anxious sellers, the dynamics have shifted sharply from the bidding-war frenzy of 2021 and 2022.
Should you jump in or keep waiting?
Three-quarters of potential buyers have been sitting tight, waiting for both mortgage rates and home prices to fall before moving.
According to TheStreet, that perfect storm might be approaching if Fannie Mae’s predictions play out. The organization even revised its home sales forecast upward to 4.92 million units, signaling expectations of a surge in buyer activity.
But waiting for perfection often means missing opportunity. Once rates crack that psychological 6% barrier, competition among buyers will likely intensify. The sweet spot for deals may arrive just before everyone else realizes the market has shifted.
Consider getting pre-approved now, even if you’re not quite ready to pull the trigger. Lenders can often lock in rates for 30 to 60 days, giving you flexibility as conditions evolve. Knowing your exact budget can help you move quickly when the right property hits the market.
The real cost of sitting on the fence
Don’t forget to crunch the numbers on waiting versus buying. Even if rates drop another half percentage point, rising home prices in your dream neighborhood could easily cancel out those savings. It’s smarter to run specific scenarios than to hold out for a mythical perfect rate.
TheStreet reports that the housing market gridlock that’s frustrated buyers and sellers alike might finally be breaking. While no one can predict the future with certainty, Fannie Mae’s track record of adjusting forecasts in response to real market shifts adds credibility to their latest projections.
Smart buyers won’t wait for rates to hit rock bottom — they’ll act when conditions are good enough to achieve their goals.
With inventory improving, prices softening in many markets, and rates potentially dipping below 6%, that moment could arrive sooner than expected. The real question isn’t whether conditions will be perfect, but whether they’re good enough for you to make your move.
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