Curious about what’s ahead for the housing market this year? And more importantly, how it might affect your plans to buy or sell a home? The best way to stay informed is by turning to trusted professionals.
Experts continuously revise their forecasts, and here’s the latest on two key factors shaping the market: mortgage rates and home prices.
What’s Happening with Mortgage Rates?
Mortgage rates remain a hot topic, with many eagerly waiting for them to drop. But the real question is: how far and how fast?
The good news is rates are projected to ease somewhat in 2025. However, don’t expect a return to the historically low 3-4% range. 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, predicting rates will settle in the mid-to-low 6% range by the end of the year.
Remember, forecasts are based on current data and can change as new economic factors come into play. Instead of fixating on exact numbers or trying to time the market, focus on the overall trend and what you can control.
Working with a reliable lender and real estate agent ensures you’ll have the latest data and insights. Even a modest rate reduction could lower your monthly mortgage payment significantly, so it’s worth staying updated.
Will Home Prices Decrease?
In short: probably not. While easing mortgage rates could make homes more affordable, prices are expected to continue climbing—albeit at a more moderate pace.
On average, experts forecast a 3% increase in home prices for 2025, with most projections landing in the 3-4% range. This represents a return to more typical, sustainable growth compared to the sharp increases seen in recent years.
If you’re hoping for a dramatic price drop, it’s unlikely. But the slower growth means buyers won’t face the steep price hikes of the past, and homeowners can expect their property values to rise steadily over time.
Why are prices still increasing? It boils down to supply and demand. While housing inventory has grown compared to last year, it still isn’t enough to meet buyer demand. As Redfin notes:
“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.”
However, housing trends can vary by location. Some areas may see higher price growth, while others could experience stability or slight declines if local inventory increases. To understand what’s happening in your area, consult a real estate agent who knows the market well.
Bottom Line
The housing market will continue to evolve in 2025, with mortgage rates likely to ease and home prices growing at a steadier pace. Staying informed and partnering with experienced professionals can help you create a plan that works for your goals, whether you’re buying or selling.