2025 Housing Market Outlook: What’s on the Horizon

As we approach 2025, understanding expert predictions for the housing market becomes crucial. Whether you’re planning to buy or sell a home next year, having insight into these forecasts can help you make informed decisions about your homeownership goals.

Here’s an early preview of the latest projections for mortgage rates, home sales, and prices in 2025:

Mortgage Rates Are Expected to Decline Slightly

Mortgage rates significantly influence the housing market. According to forecasts from Fannie Mae, the Mortgage Bankers Association (MBA), the National Association of Realtors (NAR), and Wells Fargo, we can anticipate a gradual decrease in mortgage rates throughout the upcoming year (see chart below):

Mortgage rates are expected to decrease slightly due to continued easing of inflation and a modest rise in unemployment, indicating a strong but slowing economy. Many experts believe these factors will prompt the Federal Reserve to lower the Federal Funds Rate, which typically leads to lower mortgage rates. As Morgan Stanley puts it:

“With the U.S. Federal Reserve widely anticipated to start reducing its benchmark interest rate in 2024, mortgage rates could see a slight decline as well.”

More Homes Are Expected to Sell

The housing market is likely to experience an uptick in both the number of homes available and buyer demand. Many buyers and sellers who have been holding off due to higher rates may finally decide to enter the market. This is a key reason experts are forecasting an increase in home sales for next year.

According to Fannie Mae, MBA, and NAR, total home sales are projected to rise slightly, with an estimated 5.4 million homes expected to be sold in 2025 (see graph below):

That would represent a modest uptick from the lower sales numbers in 2023 and 2024. For reference, about 4.8 million total homes were sold in 2023, and expectations are for around 4.5 million homes to sell this year.

While slightly lower mortgage rates are not expected to bring a flood of buyers and sellers back to the market, they certainly will get more people moving. That means more homes available for sale – and competition among buyers who want to purchase them.

Home Prices Will Go Up Moderately

More buyers ready to jump into the market will put continued upward pressure on prices. Take a look at the latest price forecasts from 10 of the most trusted sources in real estate (see graph below):

On average, experts predict that home prices will rise by approximately 2.6% nationwide next year. However, opinions vary on the extent of this increase. While there's a consensus that home prices will continue to grow at a moderate, more typical pace, it's important to remember that prices will differ by local market.

Bottom Line

Staying informed about the 2025 housing market forecasts is essential for planning your next steps. Whether you're buying or selling, being aware of these trends will help you make the best decision. Connect with a trusted real estate agent to discuss how these predictions may influence your plans.