Are you wondering what the housing market might look like in 2025? Good news: experts are offering some optimistic projections, particularly regarding two key factors that influence your buying or selling decisions—mortgage rates and home prices.
Whether you’re planning to buy or sell, here’s what experts predict and how it might affect your next move.
Mortgage Rates Are Expected to Decrease
One of the most important factors likely influencing your plans is mortgage rates. Fortunately, forecasts indicate a slight easing throughout 2025. (see graph below):
Although the drop in rates won’t be a smooth decline, the overall trend is expected to head downward over the next year. There may be some fluctuations along the way, as rates will respond to new economic data and inflation trends. But rather than focusing on short-term changes, keep your eye on the bigger picture.
Lower mortgage rates improve affordability. As rates fall, monthly mortgage payments shrink, which could open up more possibilities for you if you’re looking to buy a home.
This shift is also expected to draw more buyers and sellers back to the market. According to Charlie Dougherty, Director and Senior Economist at Wells Fargo:
“Lower financing costs will likely boost demand by pulling affordability-crunched buyers off the sidelines.”
As demand increases, so will inventory and competition among buyers. To stay ahead of this, work closely with your agent to understand how these changes may affect demand in your area.
Home Prices Are Predicted to Grow, But Modestly
While mortgage rates may decrease, home prices are expected to continue rising—though at a more moderate pace than in recent years. Experts predict an average national price growth of about 2.5% in 2025, which is much more manageable compared to the rapid double-digit increases seen previously. (see graph below):
What’s driving this price growth? Once again, it comes down to demand. As buyers re-enter the market, demand will rise, but supply will also increase as more sellers list their homes. The additional supply should help keep price growth in check, meaning prices will rise steadily but sustainably.
Keep in mind, though, that national trends might not reflect what’s happening in your local market. Some areas may see faster price appreciation, while others could experience slower gains. As Lance Lambert, Co-Founder of ResiClub, explains:
“Even if the national home price forecast for 2025 is correct, some regional housing markets could see mild declines, while others might still experience elevated appreciation. That’s been the case this year, too.”
Even in regions where prices may stabilize or decrease slightly, recent years of strong appreciation mean the impact might be minimal. That’s why it’s crucial to rely on a local real estate expert who can offer insight into your specific market conditions.
Bottom Line
With mortgage rates expected to ease and home prices likely to rise at a more moderate pace, 2025 could present promising opportunities for both buyers and sellers. If you have questions about how these trends may affect your real estate plans, reach out to M&J Realty Group who can help guide you through the market and maximize the opportunities ahead.
Source: Keeping Current Matters