# Peter Schiff Warns of Housing Crisis as Fannie Mae and Freddie Mac Shares Drop

- URL: https://stocks.freetheai.org/news/peter-schiff-warns-of-housing-crisis-as-fannie-mae-and-freddie-mac-shares-drop-5927b5
- Published: 2026-10-16T09:56:27Z
- Category: macro; sentiment: bearish; impact: medium
- Symbols: [OTC:FNMA](https://stocks.freetheai.org/symbols/OTC-FNMA), [OTC:FMCC](https://stocks.freetheai.org/symbols/OTC-FMCC)
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Economist Peter Schiff warned of a potential crisis in the U.S. housing market after shares of Federal National Mortgage Association (OTC:FNMA) and Freddie Mac (OTC:FMCC) experienced sharp declines. Over three trading days, FNMA stock dropped 23% and FMCC fell 21%, leaving both companies down about 80% from their highs over the past year. In recent trading, FNMA rose 16.19% to $3.66 while FMCC gained 14.04% to $3.33.

The housing sector faces growing affordability challenges driven by mortgage rates climbing above 7% in late September. Unsold home inventory is rising as sellers resist lowering asking prices while prospective buyers struggle to qualify for financing at current levels. In September, 14.5% of home purchase agreements were canceled, marking the highest rate recorded for that month, while pending home sales dropped 4% month-over-month.

Market analysts note that shifting dynamics are granting buyers more negotiating power for price reductions, repairs, and closing allowances. Continued pressure on transaction volumes could force sellers to lower asking prices to attract buyers, potentially leading to flattening or declining home prices and impacting homeowner equity.

## Key points

- Federal National Mortgage Association (OTC:FNMA) fell 23% and Freddie Mac (OTC:FMCC) dropped 21% over three trading days.
- Both mortgage finance companies remain roughly 80% below their previous 12-month highs.
- Mortgage rates exceeded 7% in late September as pending home sales declined 4% month-over-month.
- A record 14.5% of home-purchase contracts fell through during the month of September.
- Rising inventory and high borrowing costs are shifting negotiating power toward home buyers.

## Questions and answers

### Why are Fannie Mae and Freddie Mac shares dropping?

Shares have declined amid concerns over housing affordability, rising mortgage rates above 7%, and slowing home sales. Over three trading days, Fannie Mae fell 23% and Freddie Mac dropped 21%, leaving both roughly 80% below their previous annual highs.

### What happened to the US housing market in September?

In September, pending home sales dropped 4% month-over-month, and 14.5% of home-purchase agreements were canceled, representing the highest cancellation rate recorded for any September. Mortgage rates also surpassed 7% by the end of the month.

### How are high mortgage rates affecting home buyers and sellers?

High mortgage rates prevent many buyers from qualifying for loans at current asking prices. As unsold inventory grows, buyers are gaining negotiating leverage to request lower prices, repairs, and closing concessions from sellers.