Mortgage rates to stay near 6.7% through 2027 as prices ease

The Mortgage Bankers Association and Fannie Mae both project the 30-year fixed mortgage rate will average about 6.7 percent through 2027, even as existing-home prices are forecast to fall as much as 6 percent.

The MBA's August Mortgage Finance Forecast, released Aug. 20, raised its rate outlook from the prior month, projecting 6.6 percent in the third quarter of 2026 and 6.7 percent in the fourth quarter and all of 2027, the trade group representing the U.S. real estate finance industry said. In its July forecast, the MBA had projected 6.5 percent for the second half of 2026 and all of 2027.

Fannie Mae's August Housing Forecast, published Aug. 13, sees the 30-year rate averaging 6.7 percent in the third quarter and 6.8 percent in the fourth quarter of 2026, easing to 6.7 percent in the second half of 2027. The MBA projects the median existing-home price to fall 4.7 percent to $410,400 by the end of 2026 from $430,500 in the second quarter, and to $404,600 by the fourth quarter of 2027, a 6 percent decline.

For buyers, the two forces partly offset: cheaper homes but persistently expensive financing. The 30-year rate has held above 6.5 percent for six consecutive weeks, according to Freddie Mac data, with median sales prices across multiple sources well above $400,000. First-time buyers face the steepest hurdle, as the MBA also forecasts new-home prices to end 2027 at $411,200, higher than 2026, and new housing starts to decline for most of next year.

Existing-home prices ease, but new builds stay firm

The MBA's price outlook splits between previously owned and newly built homes. It expects existing-home prices to decline through 2026 and into 2027, with the median falling to $410,400 by the end of 2026 and $404,600 in the fourth quarter of 2027. The exceptions are projected increases in the third and fourth quarters of 2027, which typically reflect the seasonal strength of the homebuying market when competition can push prices higher.

New homes tell a different story. The MBA put the median price of newly built homes at $408,700 in the second quarter of 2026, holding steady in the third quarter before dropping to $400,300 in the fourth. Its 2027 projections are more volatile, with prices jumping in the first two quarters before easing, ending the year at $411,200 — higher than 2026. With new housing starts forecast to decline for most of 2027, less inventory could add to competition and support prices.

What the forecasts mean for buyers

The projections are not set in stone. Mortgage rates could fall if the conflict between the U.S. and Iran ends or inflation cools significantly, the two geopolitical and economic uncertainties the MBA cites as keeping rates above 6.5 percent. For buyers weighing timing, the forecasts suggest financing costs will stay elevated even as home prices give ground, so the monthly cost of a purchase may not fall as much as the sticker price suggests.

The last time rates lingered near current levels, in late 2023, existing-home sales slowed sharply as affordability constrained demand, according to industry data. A similar dynamic could play out if rates hold near 6.7 percent through 2027, keeping many would-be buyers on the sidelines and limiting the price relief the forecasts project. Forecasts are subject to revision, and buyers should verify current rates and prices against the latest official announcements before making decisions.

This article is for informational purposes only and does not constitute professional advice.