2025 Housing Market Predictions from Experts

Are you wondering what the housing market holds this year and how it could impact your plans to buy or sell a home? The best way to stay informed is by turning to the experts.

Housing market forecasts are constantly evolving, and here’s the latest update on two key factors expected to influence 2025: mortgage rates and home prices.

What’s Happening with Mortgage Rates?

Mortgage rates remain a hot topic, with everyone eagerly anticipating a decline. The big questions are: how much will they drop, and how soon? The good news is that mortgage rates are projected to ease slightly in 2025. However, a return to the historically low rates of 3-4% isn’t on the horizon.

As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains:

"Will we go back to 4%? According to my forecast, unfortunately, no. It’s more likely we’ll see rates around 6%."

Other experts share a similar outlook, predicting mortgage rates will stabilize in the mid-to-low 6% range by year-end.

Keep in mind that forecasts can change as new data becomes available. Expert predictions are based on current information, but factors like inflation and broader economic conditions will continue to influence where mortgage rates go. This means fluctuations are likely. Instead of trying to time the market or fixating on exact numbers, focus on the overall trend and what you can control.

Partnering with a trusted lender and real estate agent will ensure you stay informed with the latest updates and insights tailored to your situation. Even a slight decrease in rates can make a meaningful difference in your future mortgage payment, and with expert guidance, you’ll be well-prepared to navigate the market.

What About Home Prices?

Will home prices drop in 2025? The short answer: probably not. While mortgage rates may ease, home prices are expected to continue rising, albeit at a slower and more sustainable pace. According to expert forecasts, home prices are projected to increase by an average of around 3% next year, with most predictions falling within the 3-4% range. This represents a return to more typical, manageable price growth (see graph below).

Don’t expect a sudden price drop if you’re planning to buy a home this year. While that might feel discouraging if you’re hoping for a major deal, here’s the upside: the rapid price increases of recent years have cooled, giving you a more stable market to navigate. Plus, any home you purchase is likely to appreciate in value over time, which is a long-term win.

If you’re wondering why prices are still climbing, the answer lies in supply and demand. While there are more homes for sale now compared to last year, it’s still not enough to meet buyer demand. As Redfin explains:

"Prices will increase at a pace similar to the second half of 2024 because we don’t anticipate enough new inventory to meet demand."

Remember, the housing market varies by location. Some areas may see higher price increases, while others might experience flat or slightly declining prices if inventory grows locally. However, in most markets, prices are expected to rise as they typically do.

For the most accurate insight into what’s happening in your area, connect with a real estate agent who can break down the latest trends and show you what they mean for your specific goals.

Bottom Line

The housing market is constantly evolving, and 2025 will bring its own set of changes. With mortgage rates expected to ease slightly and home prices rising at a steadier, more sustainable pace, the key is to stay informed and create a strategy that suits your needs.

Connect with a local real estate expert to get the latest updates on your area and personalized guidance to help you make a smart and confident move.