Affordability, “Lock-in Effect” to Keep Housing Market Subdued in ‘25: Fannie Mae 

Housing activity is anticipated to remain subdued in 2025 due to affordability and the “lock-in effect”, where homeowners are hesitant to sell their homes, and existing home sales are anticipated to only slightly increase from their recent multi-decade lows, according to the December 2024 commentary from the Fannie Mae Economic and Strategic Research (ESR) Group. 

For 2025, Fannie Mae economists expect average mortgage rates will decline slightly but remain above 6%. Existing homes sales will remain near 30-year lows, although location is key – Fannie Mae anticipates strong activity in the Sun Belt region from increasing construction while the Northeast will be hampered by supply constraints.  

Meanwhile, economists said new home sales will remain a “bright spot”, national home price growth will decelerate, and multifamily housing will remain stable. 

“From an affordability perspective, we think 2025 will look a lot like 2024, with mortgage rates above 6%, home price growth easing from recent highs but staying positive, and supply remaining below pre-pandemic levels,” said Mark Palim, Fannie Mae SVP and chief economist.