Weekly Real Estate News
Summary
Fannie Mae's October 2026 housing forecast expects 30-year mortgage rates to average 7.5% throughout 2027, with refinance originations falling about 34% and total home sales improving only modestly.
Fannie Mae’s latest housing forecast offers little relief for borrowers hoping high mortgage rates will be temporary. The housing-finance company’s Economic and Strategic Research group expects the average 30-year fixed mortgage rate to reach 7.4% in the final quarter of 2026 and remain at 7.5% in every quarter of 2027.
The October housing forecast, posted October 14 and dated October 12, also projects a retreat in refinancing and weak home sales despite a modest recovery next year. These are forecasts, not guaranteed rate or lending outcomes.
Refinance volume faces a steep reversal
Fannie Mae projects $2.085 trillion in single-family mortgage originations in 2026, followed by $1.865 trillion in 2027. The larger change comes from refinancing: estimated refinance volume falls from $655 billion in 2026 to $430 billion in 2027, a decline of roughly 34%. The refinance share of originations drops from 31% to 23%.
Purchase lending, by contrast, is forecast to hold relatively steady at $1.429 trillion in 2026 and $1.435 trillion next year. That divergence matters for lenders that expanded staffing or capacity in anticipation of a sustained refinance recovery. If the rate path follows Fannie Mae’s assumptions, competition for purchase business could intensify while refinance-focused pipelines thin out.
The forecast does not imply every borrower will face the same quoted rate. Actual pricing depends on credit, loan size, product, points, occupancy and lender. Nor does it mean existing borrowers with lower fixed rates must refinance.
Home sales recover only modestly
Total home sales are projected at 4.672 million in 2026 and 4.713 million in 2027. Existing-home sales are projected at 4.031 million this year and 4.061 million next year. New single-family sales rise from an estimated 641,000 to 652,000.
Those numbers suggest stabilization rather than a decisive rebound. Homeowners carrying mortgages originated at substantially lower rates still have an incentive to stay put, while buyers confront higher monthly payments. WRE News reported October 14 that Redfin’s September estimates showed a record gap between home sellers and buyers. The two data sets measure different aspects of the market, but both point to fragile demand.
Fannie Mae’s house-price index forecast calls for 2.7% growth in 2026 and only 0.6% in 2027, on a fourth-quarter-over-fourth-quarter basis. That is not a prediction that every market will appreciate. Local inventory, employment and financing conditions can produce widely different outcomes.
Construction remains constrained
The research group forecasts 1.341 million housing starts in 2026 and 1.301 million in 2027. Single-family starts are projected to ease from 902,000 to 898,000; multifamily starts decline from 438,000 to 403,000. For builders, the outlook underscores the difficulty of increasing supply when financing costs and demand remain uncertain.
The report follows a separate Mortgage Bankers Association forecast covered by WRE News that also anticipates a weaker 2027 origination market. The estimates differ because the organizations use different models and assumptions; they should not be treated as interchangeable.
Fannie Mae notes that its mortgage-rate projections use market information as of September 30, while other forecasts are based on October 12. Since financial markets can shift quickly, the outlook is best read as a snapshot of current expectations and the risks lenders face, not a precise prediction of every future weekly rate survey.
