During my years of reporting on the housing market, I’ve paid especially close attention to mortgage rates — their daily shifts, the factors that impact them, and expert predictions about where rates are headed next.
Each month, I look forward to seeing what the government-sponsored enterprise (GSE) Fannie Mae forecasts about mortgage rates and the housing market in general.
And Fannie Mae dropped its March Housing Forecast this week.
Fannie Mae’s March predictions for mortgage rates were more optimistic than in its February Housing Forecast, but its expectations for new construction on single-family housing worsened for most of 2026.
It’s a double-edged sword: Lower mortgage rates make housing more affordable, but fewer houses on the market increases competition and can make homes more expensive.
Fannie Mae predicted mortgage rates will stay under 6%
Fannie Mae’s March Housing Forecast predicted that the average 30-year fixed mortgage rate will remain at 6% in Q1 (which ends in a couple of weeks), but it put the 30-year rate under 6% for the rest of 2026 and 2027.
For 2026, Fannie Mae forecast the mortgage rate will hit 5.9% in Q2, 5.8% in Q3, and 5.7% in Q4. The organization expected the rate to waver between 5.6% and 5.7% in 2027.
As I mentioned, these predictions were better than the numbers from the GSE’s February Housing Forecast. In February, Fannie Mae expected the average 30-year fixed mortgage rate to be 6.1% in Q1 and Q2 2026, then 6% all the way through the end of 2027.
So what changed? To understand, we need to look at Fannie Mae’s other monthly forecast: its overall Economic Forecast.
For most of 2026 and 2027, the Fannie Mae March Economic Forecast predicted slower gross domestic product (GDP) growth than in its February Economic Forecast.
When the country’s GDP grows, it signifies a stronger economy. Mortgage rates typically increase when the U.S. economy thrives and decrease when it struggles. Fannie Mae’s expectations for slower GDP growth indicate a weaker economy in the next couple of years, and in this case, mortgage rates would go down.
The March Economic Forecast also put the 10-year Treasury yield lower than the February Forecast. The 30-year fixed mortgage rate follows the 10-year yield more closely than any other index, so a lower yield would likely translate to home loan rate decreases.
The GSE changed its expectations for single-home construction
For the first three quarters of 2026, Fannie Mae’s March Housing Forecast predicted fewer single-family home construction starts than its February report. The organization’s latest prediction is that single-family housing starts will decrease by 6.2% year over year.
However, the March report changed its tune for Q4 2026 and throughout 2027, predicting more single-family construction than it did in February. Last month, Fannie Mae expected a 2.4% increase in single-family housing starts in 2027. This month, it forecast a 5.1% increase.
More on mortgage rates and the housing market:
- Iran war causes mortgage rate surge
- Trump signed 2 executive orders to improve home affordability
- Existing-home sales exceed Goldman Sachs’ expectations
If fewer homes are built, that means there’s less housing inventory, and homebuyer demand exceeds the supply on the market. As a result, home prices usually increase. The opposite is true: If inventory goes up, prices are steadier.
Lagging inventory is a major factor in home affordability problems and one reason President Donald Trump signed an executive order last week to speed up the building process.
How the Fannie Mae forecasts impact homebuyers and owners
I know that reading about a bunch of quarterly numbers and percentages can feel overwhelming. So let’s break down how the Fannie Mae March Housing Forecast affects Americans in real life.
- Now could already be a good time to refinance your mortgage, especially if your current interest rate is over 6%. But if you’re not ready to refinance yet, lower mortgage rates later this year give you time to save for closing costs or improve your credit score and still refinance into a lower rate in a few months.
- If you’re a homebuyer or seller, be prepared for home prices to stay relatively high for the next several months. Even if they don’t spike as a result of low inventory, they’re also unlikely to drop.
- Declining mortgage rates makes it less expensive to buy a home, lowers your monthly payment, and saves you money in interest in the long run.
- However, don’t try to time the real estate market. Just as Fannie Mae’s predictions changed from February to March, they could shift again in April. The housing market is unpredictable, so it’s best to focus on buying, refinancing, or selling when the time is right for you — not to hold out for lower interest rates or prices.
Related: Trump signs 2 executive orders to improve home affordability
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