Wondering what’s in store for the housing market this year? And more specifically, what does it all mean for you if you plan to buy or sell a home? The best way to get that information is to lean on the pros.
Experts are constantly updating and revising their forecasts, so here’s the latest on two of the most significant factors expected to shape the year ahead: mortgage rates and home prices.
Will Mortgage Rates Come Down?
Everyone’s watching mortgage rates and waiting for them to come down. So, the question is really: how far and how fast? The good news is they’re projected to ease a bit in 2025. But that doesn’t mean you should expect a 3-4% mortgage rate return. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:
“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%.”
And the other experts agree. They’re forecasting rates could settle in the mid-to-low 6% range by the end of the year (see chart below):
But you should remember that this will change as new information becomes available. Expert forecasts are based on what they know right now. And since everything from inflation to economic drivers impacts where rates go from here, some ups and downs are still very likely. So, don’t get caught up in the exact numbers here and try to time the market. Instead, focus on the overall trend and on what you can control.
A trusted lender and an agent partner will ensure you’ve always got the latest data and the context of what it means for you and your bottom line. With their help, you’ll see even a tiny decline, which can help bring down your future mortgage payment.
Will Home Prices Fall?
The short answer? Not likely. While mortgage rates are expected to ease, home prices are projected to keep climbing in most areas – at a slower, more normal pace. If you average the expert forecasts together, you’ll see prices are expected to go up roughly 3% next year, with most of them hitting somewhere in the 3 to 4% range. And that’s a much more typical and sustainable rise in prices (see graph below):
So don’t expect a sudden drop that’ll score a big deal if you’re considering buying this year. While that may sound disappointing, refocus on this if you’re hoping prices will come down. It means you won’t have to deal with the steep increases we saw in recent years, and you’ll also likely see any home you buy go up in value after you get the keys in hand. And that’s a good thing.
And if you’re wondering how prices may still rise, here’s your answer. It all comes down to supply and demand. Even though there are more homes for sale now than a year ago, it’s still insufficient to keep up with all the 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, though, that the housing market is hyper-local so that prices will vary by area. Some markets will see even higher prices, and some may see prices level off or dip a little if inventory is up in that area. In most places, though, prices will continue to rise (as they usually do).
If you want to know what’s happening where you live, you need to consult an agent who can explain the latest trends and their implications for your plans.
Bottom Line
The housing market is constantly shifting, and 2025 will be no different. With rates likely to ease a bit and prices rising more regularly and sustainably, it’s all about staying informed and making a plan that works for you.
Let’s connect so you can learn what’s happening in our area and get advice on how to make your next move happen.
