Fannie’s Short-Term Mortgage and Sales Forecasts Dim

Fannie Mae’s latest report forecasts only modest improvements for the housing market in 2025, with existing home sales expected to grow by just 4% from 2024’s near three-decade low. The revised outlook is lower than previous predictions, citing sustained high mortgage rates, which are expected to remain above 6% through 2026. Factors such as strong economic data and labor market resilience may boost demand. However, the “lock-in effect,” where homeowners stay put due to low-rate mortgages, continues to suppress inventory and sales activity. Affordability remains the biggest challenge for the market.

The report anticipates a significant rebound in 2026 when mortgage rates are expected to drop meaningfully, with existing home sales projected to rise by 17%. New home sales are forecasted to grow steadily as builders offer incentives to attract buyers. Total home sales for 2024 are expected to reach 4.71 million, rising to 4.93 million in 2025 and 5.68 million in 2026. Meanwhile, single-family mortgage originations are projected to hit $1.64 trillion in 2024, climbing to $1.94 trillion in 2025 and $2.40 trillion by 2026.

Early Returns Indicate Declining Commissions

Sales commissions have dropped significantly following the class-action settlement between the National Association of Realtors (NAR) and homebuyers, according to a recent RISMedia survey. Effective August 17, the settlement prohibits listing agents from posting buyer-agent commission splits on multiple listing services (MLS), leading to a 0.68% overall decline in commissions. This translates to a $2,870 loss per transaction on a median-priced home. The impact has been more pronounced for less experienced agents, with new buy-side agents seeing their commission share drop from 2.58% to 1.82%, while veteran agents experienced smaller losses. The survey also revealed that cooperative compensation—where listing agents pay buyer agents—dropped from 91% of transactions before the settlement to 77% afterward.

The settlement has shifted negotiation power, with buyers now more likely to push for lower fees. Additionally, new requirements for agents to sign agreements with buyers before showing properties have seen limited compliance, with only 57% adhering to the rule so far. This reflects ongoing adjustment challenges within the industry. While some sellers still offer cooperative compensation to attract buyers, the report highlights that the practice is waning as consumers become more aware they are not obligated to pay the buyer’s agent. Experts predict the changes will continue to reshape real estate compensation practices, with experience level playing a crucial role in determining commission outcomes.

Saving on Housing Drives Most People to Move

A recent study by StorageCafe highlights a significant reason for Californians relocating to Arizona: housing affordability. Nearly half of those who move save around $1 million when purchasing a home in Arizona. With over 630,000 Californians relocating to Arizona in the past decade, popular routes include Los Angeles County to Phoenix’s Maricopa County, where housing costs are significantly lower. For instance, moving from San Mateo County, California, to Maricopa County reduces the average home price by $1.07 million. Even renters see substantial savings, with monthly rents dropping by over $1,600 in some cases.

Another study by the National Association of Realtors (NAR) confirms that affordability is a crucial driver of relocation decisions, alongside proximity to family, outdoor space, and lower taxes. Most movers headed to the South or West, with Florida and Texas leading in net migration. Arizona also benefits from lower income and corporate tax rates compared to California, further incentivizing the move. While 94% of relocations were permanent, nearly one in five movers returned to areas they had previously lived in.