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2027 rate outlook revised higher

The 2027 outlook for US mortgage rates points to only limited relief for homebuyers who have been waiting to buy. According to the latest forecasts, 30-year fixed mortgage rates could stay close to current levels next year as well. Data from Mortgage News Daily show the average rate is currently at 6.81%.

Fannie Mae raised its average mortgage rate forecast for 2027 to 6.7% from 6.3% a month earlier. The Mortgage Bankers Association also projected 6.7% in its August forecast, up from 6.5% in June. Together, the institutions that had earlier expected lower rates now see a more persistent high-rate environment.

This suggests that waiting until 2027 may not make buying a home significantly cheaper. In particular, persistently high borrowing costs are weakening expectations of a meaningful drop in monthly payments.

What is driving the higher forecasts?

The main pressure in the market remains inflation. Mortgage rates often move in step with the yield on the US 10-year Treasury note; when inflation expectations remain elevated, Treasury yields — and, in turn, mortgage rates — can stay high as well.

According to the US Bureau of Economic Analysis, the inflation measure closely watched by the Fed rose 3.7% year over year in July. That is well above the central bank's 2% target. Reintroduced tariffs and cost pressures stemming from the war in Iran are also seen as factors making lower-rate expectations harder to justify.

  • High inflation can push investors to demand higher bond yields.
  • Tariffs raise the cost of materials such as lumber, plywood, steel, aluminum, copper and cement.
  • Rising oil prices increase gasoline and diesel costs used in production and transport.

Realtor.com had previously projected that rates would hover around 6.3% for the remainder of 2026. However, the company said that inflation and the war in Iran have created fresh upward pressure on rates, making that outlook look too optimistic.

Home prices and affordability remain under pressure

Alongside persistently high rates, buyers' budgets are also weakening. According to an analysis by the Hamilton Project at the Brookings Institution using federal data, average hourly earnings, adjusted for inflation, fell at an annualized rate of 1.66% in the first half of 2026. That limits how much households can set aside for housing.

Although home prices nationwide declined on an annual basis throughout 2026, they are still roughly 59% higher than in 2020. In addition, Fannie Mae's latest survey of more than 100 housing experts expects national home prices to rise by 2.2% in 2027. In a market where rates are high and prices are climbing, the strain on affordability is likely to intensify.

Supply-side problems are also continuing. Builders are facing both a shortage of skilled labor and rising material and energy costs. That increases the risk of fewer homes coming onto the market — and at higher prices.

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