God created man for a loving relationship; a loving relationship must be a free-relationship. We should be thankful that God’s fore-knowledge of man’s transgression did not cause God to restrict His created purpose for mankind.

The Bible never depicts God as a divine-brain; therefore His omniscience is only one characteristic of His being, love on the other hand is a self-identity that God allows. The “Heart” as outlined throughout the Bible is God’s central consideration. As we know the “fall of man” is not the end of the story as there is also the “salvation of man” as well. The fall of man allows the salvation of man.

The fall centers on faith transgressed:

God says:

Genesis 2:17 But of the tree of the knowledge of good and evil, thou shalt not eat of it: for in the day that thou eatest thereof thou shalt surely die.

And the serpent says:

Genesis 3:4 …unto the woman, Ye shall not surely die…she took of the fruit thereof, and did eat

Eve placed her faith in the word of the serpent rather than the word of God.

Salvation centers on faith’s apprehension of grace:

Romans 4:16 Therefore it is of faith, that it might be by grace; to the end the promise might be sure to all the seed

Romans 5:2 By whom also we have access by faith into this grace wherein we stand, and rejoice in hope of the glory of God

Ephesians 2:8 For by grace are ye saved through faith; and that not of yourselves: it is the gift of God

Jesus’s view of the “heart” in Matthew:

5:8 Blessed are the pure in heart: for they shall see God. 5:28 But I say unto you, That whosoever looketh on a woman to lust after her hath committed adultery with her already in his heart 6:21 For where your treasure is, there will your heart be also. 12:35 A good man out of the good treasure of the heart bringeth forth good things: and an evil man out of the evil treasure bringeth forth evil things. 15:18 But those things which proceed out of the mouth come forth from the heart; and they defile the man.

Love and faith inhabit the heart:

Romans 10:9,10 That if thou shalt confess with thy mouth the Lord Jesus, and shalt believe in thine heart that God hath raised him from the dead, thou shalt be saved. For with the heart man believeth unto righteousness; and with the mouth confession is made unto salvation

Ephesians 6:6 Not with eyeservice, as menpleasers; but as the servants of Christ, doing the will of God from the heart;

Hebrews 10:22 Let us draw near with a true heart in full assurance of faith

This is a big debate between the so-called Classical Theists who believe that God's knowing everything is absolute and includes exhaustive foreknowledge of the future as a certain absolute not merely as possible contingencies, and the Open Theists who believe that God only knows everything that's possible to be known and that the future is not possible to be known exhaustively until it happens because God gave us free will.

Although the name "Classical Theism" makes it sound like this one is older, that's not really the case. Both views have undoubtedly always had their supporters. Open Theism is a modern term, but Open Theist type views certainly go back as far as Faustus Socinus in the time of the Reformation (condemned as a heretic by mainstream Trinitarian Protestantism mainly for his non-Trinitarian views), and even further back to characters like Pelagius (4th century) who were condemned by the Catholic church as heretics.

Why Did God Create the Universe (or, at least, Humanity)?

The answer to that will speak to your question about God's foreknowledge.

I will propose an executive summary: the purpose of humanity¹ is to know and love God. (Jn 17:3) The testimony of the Scripture is at least compatible with this idea, though I find more than just circumstantial evidence in support of it, what's written in the Bible does not say precisely that.

If we accept this (unproven here) conclusion, then God gave humans free will in order that they might be capable of genuinely loving him. True love is voluntary, so in order for us to be capable of loving God, we also had to be capable of something else, including rebellion/sin.

So, even though God knew what choices we would make, if he actually wanted people to love him, then he had to give them the chance to do so. Otherwise, our entire existence would have been merely a thought experiment that didn't turn out well—but that's not why God created humanity. He wanted us to know and love him.

Even though God knew that not everyone would choose to love him, he still wanted those who would love him to get to do so.

¹ Technically, God created us for his pleasure (Rev 4:11), but this is not entirely informative. If you consider Genesis 1-3 and Revelation 21-22, the idea that how things will be in the end is similar to how they were in the beginning, and that God's desire for us has been the same all along. In Eden, God walked among humans and talked to them. That closeness ceased after humans sinned, but that intimacy is restored again after the resurrection. Jesus summed up eternal life this way: "that they may know [God]." (Jn 17:3).