MBA forecasts slow 2026 growth amid inflation, rate hikes

"MBA economists Mike Fratantoni, Joel Kan and Judie Ricks wrote that the forecasts show 2025 GDP growth of 1.6% and a 35% chance of a recession over the next 12 months. Growth is expected to remain in a narrow range of about 1.5% to 1.7% from 2026 through 2028, the forecast said. The outlook comes amid mixed economic signals. The Federal Open Market Committee cut its benchmark federal funds rate by 25 bps at its December meeting, but the decision was contested: one governor voted for a larger cut, while two members dissented in favor of no change. The projections published from this meeting show the Committee does not see a clear path, the economists included in their commentary."

"The economists expect mortgage rates to stay in a narrow range throughout 2026, which could limit a housing rebound and keep home prices largely flat. Mortgage rates have inched higher over the past week, slowing the pace of refinance applications at a time of year when the purchase market typically slows sharply. Our forecast is for mortgage rates to stay within a narrow range over the next few years, between 6% and 6.5%. This forecast becomes more likely as the Fed reaches the end of their cutting cycle next year, the economists wrote in their commentary."

2025 GDP growth is projected at 1.6% with a 35% chance of recession over the next 12 months. Annual growth is expected to remain in a narrow range of about 1.5% to 1.7% from 2026 through 2028. The Federal Open Market Committee cut the federal funds rate by 25 basis points in December amid contested votes, while inflation remains above the Fed’s target and payroll growth has largely stalled since April. The unemployment rate rose to 4.6% in November and is expected to edge to 4.7% in the first half of 2026. Mortgage rates are forecast to stay between 6% and 6.5%, which could limit a housing rebound, keep national home prices essentially flat with growth slowing to about 1% by late 2025 and turning slightly negative in late 2026, and modestly increase single-family mortgage originations to about $2.2 trillion in 2026.

Read at www.housingwire.com