ENRATES, HOUSING & REAL ESTATE FINANCE · OCTOBER 18, 2026
Fannie Mae Forecasts Higher Long-Term Rates and Slower Housing Activity
Fannie Mae's October forecast projects the 10-year Treasury yield averaging 5.3% in 2027, the 30-year mortgage rate averaging 7.5%, and total housing starts declining to 1.301 million units.
What Fannie Mae released
Source publication date: October 14, 2026; the underlying forecast tables are dated October 12. Fannie Mae's Economic and Strategic Research Group published updated economic and housing projections. It forecasts real GDP growth of 2.6% in 2026 and 2.5% in 2027, while business fixed investment growth slows from 10.3% in 2026 to 5.0% in 2027. The forecast is an analytical estimate and is subject to change.
- 012027 mortgage rate forecast at 7.5%
- 02Housing starts projected to decline
- 03Business investment growth projected to slow
The rate path remains challenging for real estate
The economic forecast shows the average 10-year Treasury yield rising from 4.7% in 2026 to 5.3% in 2027. The housing forecast shows the average 30-year fixed residential mortgage rate rising from 6.7% to 7.5%. Those residential averages are not commercial-loan quotes. Commercial real-estate pricing may use Treasury yields, SOFR, lender cost of funds, or another benchmark together with property- and sponsor-specific spreads, floors, fees, amortization, covenants, and recourse.
Housing activity is projected to remain restrained
Fannie Mae projects total housing starts declining from 1.341 million units in 2026 to 1.301 million in 2027, with multifamily starts falling from 438,000 to 403,000. Total home sales are projected to increase slightly from 4.672 million to 4.713 million. Forecasts can diverge from actual results and do not describe a particular market, development site, tenant base, or property value.
Practical borrower and investor takeaway
Update construction and acquisition models with current local absorption, concessions, rents, operating expenses, taxes, insurance, cap rates, and lender terms. Stress higher benchmarks, wider spreads, slower lease-up or sales, delayed completion, and lower exit proceeds. Confirm rate-lock mechanics, extension tests, interest reserves, recourse, completion support, and refinance timing. Treat the forecast as market context—not approval, pricing, valuation, or a substitute for transaction-specific diligence.
Property borrowers and investors should re-run acquisition, construction, and refinance models with current lender quotes and higher-rate, slower-absorption cases rather than treating the published forecast as a commercial-loan commitment.
Discuss a financing need →This independent summary is based on the cited source and is provided for general educational purposes only. Terms and program requirements may change.