Curious about what the housing market has in store for 2025? Whether you’re planning to buy or sell a home, understanding expert forecasts can help you navigate the market with confidence. Here’s the latest on two of the biggest factors expected to shape the year ahead: mortgage rates and home prices.
Will Mortgage Rates Come Down?
Everyone’s watching mortgage rates closely, hoping for a decrease. But the real question is: how much and how fast will they drop? The good news is that rates are projected to ease slightly in 2025. However, don’t expect a return to the 3-4% rates we saw in previous years.
According to Lawrence Yun, Chief Economist at the National Association of Realtors (NAR):
“Are we going to go back to 4%? Per my forecast, unfortunately, we will not. It’s more likely that we’ll go back to 6%.”
Other experts agree, forecasting that rates could settle in the mid-to-low 6% range by the end of the year. While this isn’t a drastic drop, even a slight decrease can significantly lower your monthly mortgage payments.
Keep in mind that these forecasts are based on current data, and factors like inflation and economic shifts can still cause fluctuations. Instead of trying to time the market, focus on the overall trend and what you can control.
A trusted lender and a real estate agent can provide up-to-date insights and help you understand how changes in mortgage rates affect your budget. With their guidance, you’ll see how even a small rate adjustment can positively impact your homebuying journey.
Will Home Prices Fall?
The short answer? Not likely. While mortgage rates are expected to ease, home prices are projected to continue climbing—just at a slower, more sustainable pace.
If you average expert forecasts, home prices are expected to rise by roughly 3% in 2025, with most predictions landing between 3-4%. This represents a more typical and stable growth rate compared to the rapid increases we’ve seen in recent years.
So, if you’re hoping for a significant price drop, it’s unlikely. But here’s the silver lining: a slower rate of price growth means you won’t face the steep increases that have characterized the market in recent years. Plus, any home you buy now will likely increase in value over time, contributing to your long-term wealth.
Why are prices still rising? It all comes down to supply and demand. Even though there are more homes for sale now than a year ago, it’s still not enough to meet the high demand from buyers. As Redfin explains:
“Prices will rise at a pace similar to that of the second half of 2024 because we don’t expect there to be enough new inventory to meet demand.”
Remember, the housing market is hyper-local. While some areas may see prices level off or dip slightly due to increased inventory, most markets will experience steady price growth.
To understand what’s happening in your area, lean on a local real estate agent who can explain the latest trends and how they affect your buying or selling plans.
Bottom Line
The housing market is always evolving, and 2025 will be no exception. With mortgage rates likely to ease slightly and home prices rising at a more normal pace, staying informed is key.
Let’s connect so you can get the latest insights on what’s happening in our area and make smart decisions for your next move. Whether you’re buying or selling, having the right information and guidance can make all the difference.
