Despite the improved growth outlook, inflation expectations remain largely unchanged. The Consumer Price Index (CPI) is projected to rise 3.5% in 2025, consistent with last month's forecast.

Core CPI is expected to rise 3.8% during the year, down slightly from a prior estimate of 3.9%, while the 2026 projection remains at 2.6%.

Fannie Mae also lowered its forecast for mortgage rates.

The 30-year fixed-rate mortgage rate is now projected to end 2025 at 6.1% and decline further to 5.8% by the end of 2026. Previous estimates had rates at 6.2% and 6%, respectively.

The outlook for home sales has improved slightly. Total existing- and new-home sales are now expected to reach 4.92 million in 2025 -- up from the prior forecast of 4.86 million.

Mortgage originations are also set to rise modestly. Fannie Mae now forecasts total origination volume of $1.99 trillion in 2025 and $2.38 trillion in 2026, compared to last month's estimates of $1.98 trillion and $2.33 trillion.