Fannie Mae: This year’s home sales to outperform 2024 totals

Sales of existing homes will be at or near 30-year-lows for “the near future” before picking up in the spring and ending the year by outperforming last year’s totals, Fannie Mae’s chief economist told Scotsman Guide on Wednesday.  

Total home sales, including new homes, existing homes, condominiums, and co-ops, will reach 4.9 million units, up nearly 3% compared to last year, predicts Fannie Mae.

“We have a slightly stronger increase in new single-family sales in 2025, up 7% (compared to 2024), and for existing (home sales), we have it up 2.3%,” Fannie Mae Chief Economist Mark Palim said shortly after releasing January’s housing and economic forecast.

Overall mortgage origination volume is expected to increase 13% year over year in 2025 to $1.9 trillion. More homes will be sold than last year because of a strong economy, with solid predicted growth and higher wages, according to Palim.  

“We ended the year with a good economy,” Palim said, noting the unemployment rate hovering around 4% is “pretty good.”

“We have job growth, we have income growth now that’s running ahead of inflation, so those things are both helpful for demand,” Palim said.

But ongoing issues remain. Higher-than-expected mortgage rates and a shortage of homes in many markets will weigh on existing sales. Homeowners will continue to forego selling their home because they’re “locked-in” to a much lower rate.

Palim predicts mortgage rates will close 2025 and 2026 at 6.5% and 6.3%, respectively, which is slightly higher than originally projected. However, rates could also be volatile this year.

“The forecast is just a forecast,” he said. “Rates may, in fact, end 2025 or 2026 lower than in that forecast or higher.”

One bright spot for affordability is that wages are expected to rise faster than home prices and rental growth. Home price growth is expected to cool to 3.5% nationally, down from 5.8% last year. Home price trends, though, will vary by location due to regional differences and the supply of homes.  

“In markets where new home sales are plentiful, it’s easier to build,” Palim said. “In states like Texas or Florida, you are seeing inventories of homes available for sale now exceeding where they were in 2019, so that’ll help. But, of course, it’s very regional.”