Fannie Mae predicts shift in mortgage rates, home prices

In my years of reporting on mortgages and the housing market, I've seen homebuyers worry about two main factors when house hunting: mortgage rates and home prices.

I was in the same boat when buying my first home. I was aware of my purchase price limit, but I was shopping at a time when mortgage rates were rising. If possible, I wanted to buy before rates skyrocketed altogether. I had to keep an eye on both sides of the affordability issue.

Fannie Mae, the government-sponsored enterprise (GSE) that backs many conventional mortgage loans, has released its April 2026 Housing Forecast.

The forecast breaks down many aspects of the housing market, but the two that always draw me in are its predictions for - you guessed it - mortgage rates and home prices for the upcoming months.

Fannie Mae mortgage rate predictions increase

In the Fannie Mae March Housing Forecast, the GSE's predictions were pretty optimistic, putting the national average 30-year fixed mortgage rate at 6% or lower through 2026 and 2027.

However, Fannie Mae's predictions were based on mortgage rates from February 27 - the day before the U.S. and Israel attacked Iran. After these attacks, interest rates increased for five consecutive weeks, according to Freddie Mac. So, Fannie Mae's rate projections became unrealistic almost immediately.

Consequently, Fannie Mae's April mortgage rate predictions were higher than its March ones.

In its April forecast, the GSE put the 30-year fixed rate at 6.3% for Q2 2026, then at 6.1% throughout the rest of 2026 and 2027. In March, the organization had predicted a rate as low as 5.7% in 2026 and 5.6% in 2027.

Related: Dave Ramsey sends strong message on housing market

But here's an important note: The April rate forecast was based on rates from March 31. According to Freddie Mac, this was when rates were at their highest in a long time, nearing 6.5%.

Rates have since decreased for two straight weeks, with the 30-year rate at 6.3%.

I suspect Fannie Mae's April mortgage rate projections are still more realistic than its March ones, because rates have been volatile due to issues such as tariffs and the war in Iran. As long as geopolitical strife impacts Americans, there are opportunities for home loan rates to increase.

Fannie Mae forecasts higher home prices

The Fannie Mae Home Price Index (HPI) measures quarterly changes in national housing prices. This includes all single-family homes except condos.

Fannie Mae updates the HPI at the beginning of every quarter. So, the HPI predictions in its April Housing Forecast were different than those in the last three monthly forecasts.

First, let's look at Fannie Mae's updated numbers for Q1 2026. Originally, the GSE predicted that U.S. home prices would increase by 2.6% in Q1. Its latest HPI revealed that the year-over-year increase was actually 2.8%.

More on mortgage rates and home prices:

• Zillow sends blunt message about affordability, housing market
• Redfin sees shift in home prices, housing market
• Home-buying costs are 4 times what buyers expect

In its previous HPI, Fannie Mae forecast that single-family property prices would tick up by 3% in Q2 2026, 3.1% in Q3, and 2.4% in Q4. Then, price increases would stay in the mid-to-low 2% range throughout 2027.

The revised HPI foresaw stronger home price growth in 2026: 3.4% in Q2, 3.8% in Q3, and 3.2% in Q4. The Fannie Mae HPI methodology considers data from recent home sales transactions, so quarterly forecasts change based on update housing market information.

What Fannie Mae's forecast means for homebuyers

Higher mortgage rates, higher home prices - neither of these predictions feel like good news for homebuyers. But there's more to take away from the Fannie Mae April Housing Forecast.

• First things first: It's just a forecast. The real estate market is constantly changing, and none of these numbers are set in stone. And remember, Fannie Mae's mortgage rate predictions are useful, but they're based on what rates were doing at the end of March. So, take the forecast seriously ... but with a grain of salt.
• Fannie Mae's data put the average 30-year mortgage rate to above 6% through the end of 2027. This is a good reminder that homebuyers shouldn't try to time the real estate market to hold out for lower interest rates. Drastically lower rates probably won't arrive anytime soon.
• Yes, the GSE now predicts more aggressive home price growth than it did earlier this year. But, as the S&P Cotality Case-Shiller U.S. National Home Price Index shows, the numbers are still a significant improvement over the rate of growth between 2020 and 2022. Home prices tend to increase over time, but slower growth is better for buyers.

Related: Redfin reveals change in home sales, housing market

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This story was originally published April 17, 2026 at 5:07 AM.