The US housing market has been brutal for buyers to navigate in the last few years, leaving house hunters wondering when conditions might ease.
Goldman Sachs shared three predictions this week about where things may be headed. The bank updated its forecast for the path of mortgage rates, predicted the impact of Donald Trump’s possible move to shake up mortgage finance giants Fannie Mae and Freddie Mac, and examined the possible effects of lower immigration on supply.
Here’s what the bank sees ahead for US housing through the rest of 2025.
Mortgage rates will stay elevated
Don’t count on rate cuts to meaningfully bring mortgage rates down this year. Goldman Sachs raised its year-end prediction for the 30-year mortgage rate from 6.1% to 6.75%.
That’s not much lower than this week’s average rate of about 6.9%.
Mortgage rates are pegged to Treasury yields, which have been stuck at elevated levels as the bond market prices in sticky inflation and the possible impacts of higher US budget deficits.
Any changes to Treasury yields — and mortgage rates — are likely to be driven by government spending and surprises in economic data.
Goldman Sachs expects 10-year Treasury yields to rise as high as 4.5% by year-end, a level that many investors believe could push back against a stock market rally.
With rates remaining high, the bank doesn’t expect the home affordability picture to improve for the rest of the year, and home prices are likely to remain high thanks to low supply.
The bank expects home prices to rise 3.2% in 2025, but elevated mortgage rates could cap that increase.
Privatizing Fannie and Freddie will have little impact
President Donald Trump has supported the idea of privatizing Fannie Mae and Freddie Mac, a move that some commentators say could lead to elevated mortgage rates. However, Goldman Sachs doesn’t think privatization of the mortgage finance firms, which were taken over in the wake of the 2008 crisis, will present material risks to mortgage rates.
Analysts at JPMorgan and PIMCO have warned that privatization could lead to higher and more volatile borrowing costs, but Goldman Sachs argues that cost increases will be primarily constrained to higher loan-level price adjustments on “non-core” mortgage products such as investor loans and second-home loans, leaving those in the market for a primary residence untouched.
Fannie Mae and Freddie Mac shares have soared this year, but their performance has been largely uncorrelated with mortgage-backed securities spreads, signaling that investors remain confident in the federal guarantee.
Home construction will hold up even as immigration declines
Concerns have grown about the impact of reduced immigration on single-family home construction, as immigrant workers make up roughly a quarter of the construction labor force.
In an already supply-constrained market, reduced single-family construction could exacerbate the housing crisis by making labor more expensive and raising home prices for buyers.
Yet, Goldman Sachs doesn’t see reduced immigration as a major near-term risk to construction for two key reasons. Economic uncertainty and high mortgage rates have already put a damper on homebuilding activity, subsequently reducing labor demand. Single-family housing starts declined 12% year-over-year in April.
Additionally, labor supply saw a big boost under the Biden administration, with around five million unauthorized or humanitarian immigrants entering the country between January 2021 and January 2025. Starting from a position of elevated immigration will lessen the negative impact of immigration outflows. Goldman Sachs estimates around 700,000 negative net immigrants through the end of 2026, or a 14% reduction.
