Mortgage Rate Relief Ahead? What the Forecast Means for Florida’s Over-Stocked Housing Market

In a move that could bring much-needed relief to both homebuyers and sellers, Fannie Mae is projecting a steady decline in mortgage rates over the next 18 months—a shift that could significantly impact real estate markets across the country, particularly here in Florida.

According to Fannie Mae’s May 2025 Economic and Housing Outlook, the 30-year fixed mortgage rate is expected to end this year at 6.1% and drop even further to 5.8% by the end of 2026. This is a slightly more optimistic projection than April’s forecast, which had rates at 6.2% by the end of 2025 and 6.0% by the end of next year.

The current rate, as reported by Freddie Mac, sits at 6.81% as of last week, meaning there's still a considerable gap between where we are and where we’re headed.

(Source: Scotsman Guide, summarizing Fannie Mae and Freddie Mac forecasts)

What This Means for Florida's Housing Market

For states like Florida—where certain markets are experiencing an inventory surplus—this could be a game changer. Elevated rates have slowed buyer activity, increasing the number of homes sitting on the market and in some cases prompting price reductions or seller concessions.

But lower rates ahead could stimulate demand in a big way.

Here's how:

1. Pent-Up Buyer Demand Will Be Unleashed

Many potential buyers have been sidelined by high borrowing costs. As rates fall into the low 6s and potentially the 5s, we can expect a surge of activity from first-time buyers, move-up buyers, and even investors re-entering the market.

2. Sellers Will Gain Leverage

In high-inventory areas, sellers have had to work harder to compete. Lower rates should reduce inventory absorption times and shift the balance slightly back in sellers’ favor—especially for well-priced and move-in-ready homes.

3. Refinancing Opportunities Create New Momentum

Even current homeowners locked into higher rates might seize the opportunity to refinance or make lateral moves, adding liquidity and mobility to the market.

4. Stabilization of Pricing

Over-inventoried regions like parts of the Gulf Coast and Central Florida have seen some pricing instability. Increased demand due to better affordability can stabilize pricing, allowing the market to recover without overheating.

Final Thoughts

While mortgage rates aren't going to drop overnight, the direction they're heading offers hope. For those of us working in Florida real estate, these projections are a beacon of optimism. We may be looking at the tail end of a high-rate era—and the dawn of a more balanced, active market.

If you've been waiting on the sidelines, 2025 might just be your time.

Big thanks to the Scotsman Guide for highlighting this important data from Fannie Mae and Freddie Mac. Stay informed, stay strategic—and as always, if you're thinking about buying or selling in the Sarasota-Bradenton area, let’s talk.

Gerry Tomchinsky

Realtor® | KW Suncoast

Phone: 941-577-5184

Email: gerrytomchinsky@kw.com

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