As we approach 2025, it’s crucial to understand what experts are predicting for the housing market. Whether you’re planning to buy or sell a home next year, having a clear understanding of these forecasts can help you make the best decisions for your homeownership goals.
Here’s an early preview of the latest projections for mortgage rates, home sales, and prices in 2025.
Mortgage Rates Are Projected To Come Down Slightly
Mortgage rates are a crucial factor in the housing market. Forecasts for 2025 from Fannie Mae, the Mortgage Bankers Association (MBA), the National Association of Realtors (NAR), and Wells Fargo suggest a gradual decline in mortgage rates throughout the year (see chart below):
Mortgage rates are expected to decrease as ongoing inflation reduction and a modest rise in unemployment indicate a strong yet slowing economy. Many experts believe these factors will prompt the Federal Reserve to lower the Federal Funds Rate, which typically results in lower mortgage rates. As Morgan Stanley notes:
“With the U.S. Federal Reserve widely expected to begin cutting its benchmark interest rate in 2024, mortgage rates could drop as well—at least slightly.”
Expect More Homes To Sell
The market is expected to experience a boost in both the supply of available homes and a rise in demand, as more buyers and sellers who have been holding off due to higher rates decide to take action. This is a key reason why experts are predicting an increase in home sales next year.
Fannie Mae, MBA, and NAR project that total home sales will see a slight increase, with an average of approximately 5.4 million homes expected to be sold in 2025 (see graph below):
This would mark a modest increase from the lower sales figures in 2023 and 2024. For context, approximately 4.8 million homes were sold in 2023, with around 4.5 million expected to be sold this year.
Although slightly lower mortgage rates aren’t expected to bring a surge of buyers and sellers back to the market, they will encourage more activity. This will lead to an increase in available homes and greater competition among buyers.
Home Prices Will Go Up Moderately
With more buyers entering the market, prices are likely to face continued upward pressure. Here are the latest price forecasts from 10 of the most reliable sources in real estate (see graph below):
