Written by: Internal Analysis & Opinion Writers
Americans waiting for the housing market to become more affordable may have to remain patient. Mortgage rates are now expected to stay elevated through much of 2027, while home prices could continue rising modestly, creating another difficult year for prospective buyers hoping that lower borrowing costs will make homeownership easier to achieve.
The outlook has shifted considerably in recent months. Earlier forecasts generally anticipated that mortgage rates would gradually decline as inflation moderated. Instead, persistent inflation and broader economic uncertainty have caused economists to revise their expectations, with several major housing forecasters now predicting that borrowing costs will remain near current levels next year.
Fannie Mae currently expects the average 30-year fixed mortgage rate to be approximately 6.7% in 2027, up from its previous forecast of 6.3%. The Mortgage Bankers Association has reached a similar conclusion, forecasting an average rate of approximately 6.7% next year after previously expecting borrowing costs to move lower.
Those projections could disappoint buyers who have postponed purchasing a home in anticipation of substantially lower mortgage rates.
"Most of the recent affordability challenges are due to rising mortgage rates," Realtor.com Senior Economist Joel Berner told CNBC. While national home prices have shown some weakness during 2026, Berner explained that inflation remains an important underlying factor affecting affordability and financing conditions.
Mortgage rates are influenced heavily by the yield on the 10-year U.S. Treasury note. When investors become concerned about inflation, they typically demand higher yields to compensate for the declining purchasing power of future payments. Mortgage rates generally move in the same direction, meaning persistent inflation can make it difficult for borrowing costs to decline substantially.
"Economic realities are forcing even the most optimistic rate forecasters to predict a higher interest rate environment than they expected at the beginning of the year," Marty Green, a mortgage lending attorney with Polunsky Beitel Green, told CNBC.
Inflation affects buyers in another important way: household purchasing power. Even when wages increase, consumers can lose ground if prices rise faster than their incomes. That can make it more difficult to save for a down payment, cover closing costs, and qualify for the monthly payment associated with today's home prices and mortgage rates.
Home prices also remain a significant obstacle. Despite weakness in portions of the housing market during 2026, home values remain substantially higher than they were before the pandemic. According to CNBC's analysis, home prices are roughly 59% higher than in 2020. A Fannie Mae survey of housing experts forecasts that national home prices could increase another 2.2% in 2027.
That combination creates a particularly difficult situation for prospective purchasers. Buyers could face mortgage rates remaining in the upper-6% range while home prices continue gradually increasing, preventing the significant affordability improvement many consumers have been waiting for.
Berner described the combination of higher rates and elevated home prices as a "double whammy" for buyers.
Increasing the nation's housing supply could provide some relief by creating more competition among sellers and moderating price growth. However, builders are facing their own affordability challenges. Construction companies continue dealing with higher prices for lumber, plywood, steel, aluminum, copper, cement, and other materials, while shortages of skilled construction workers remain a persistent problem.
Higher energy prices are adding another layer of pressure. Rising gasoline and diesel costs increase the expense of manufacturing and transporting building materials, which can ultimately increase the cost of constructing new homes.
"This reduces the amount of inventory coming into the housing market and reduces affordability," Berner told CNBC.
The outlook does not necessarily mean buyers should abandon plans to purchase a home in 2027. Housing conditions vary significantly by market, and increasing inventory in some areas could provide buyers with greater negotiating power. Slower sales may also encourage sellers and builders to offer concessions, closing-cost assistance, mortgage rate buydowns, or price reductions.
Prospective buyers should also remember that mortgage forecasts are estimates rather than guarantees. Inflation, Treasury yields, economic growth, Federal Reserve policy, geopolitical developments, and financial market conditions can all change unexpectedly, potentially pushing mortgage rates either higher or lower than currently projected.
Ultimately, buyers waiting for a dramatic improvement in affordability during 2027 may need to adjust their expectations. Current forecasts suggest mortgage rates could remain relatively close to today's levels while home prices continue modestly increasing. Rather than attempting to perfectly time the housing market, buyers may need to focus on their personal financial readiness, available inventory, and affordability within their local market. If economic conditions change, the outlook can change with them—but until the data supports that shift, buyers should make decisions based on verified conditions rather than assumptions that substantially lower mortgage rates are just around the corner.
