Expert Forecasts for the 2025 Housing Market

Curious about what the housing market holds this year? Specifically, how it will impact your plans to buy or sell a home? The best way to get reliable insights is to turn to the experts. They’re constantly updating their forecasts, so here’s the latest on two key factors expected to shape the year ahead: mortgage rates and home prices.

 

Will Mortgage Rates Come Down?

Everyone’s watching mortgage rates, hoping for a drop. The real question is: how much and how quickly? The good news is that rates are expected to ease somewhat in 2025. However, don’t expect a return to the 3-4% rates we saw in the past. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), puts it:

 “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%.”

Other experts are on the same page. They predict rates may settle in the mid-to-low 6% range by the end of the year (see chart below):

Keep in mind, these forecasts are subject to change as new data emerges. Experts base their predictions on what they know at the moment, and since factors like inflation and economic shifts influence rates, some fluctuations are still likely. Don’t get too caught up in the exact numbers or try to time the market. Instead, focus on the broader trend and what you can control.

A trusted lender and agent will ensure you have the latest data, along with the context to understand what it truly means for you and your finances. With their guidance, you’ll see how even a small drop in rates can lower your future mortgage payment.

 

Will Home Prices Fall?

The short answer? Unlikely. While mortgage rates are expected to ease, home prices are still projected to rise in most areas, though at a slower, more typical pace. When you average expert forecasts, prices are expected to increase around 3% next year, with most predictions falling in the 3-4% range. This represents a more normal and sustainable price growth (see graph below):

Don’t expect a sudden drop in prices that will land you a major bargain if you’re planning to buy this year. While that might be disappointing if you were hoping for a price decline, here’s the upside: you won’t have to face the steep price hikes we’ve seen in recent years. Plus, any home you do purchase is likely to appreciate in value after you close. And that’s actually a positive outcome.

If you’re wondering how prices can still be rising, it all boils down to supply and demand. While there are more homes on the market now compared to a year ago, it’s still not enough to meet the demand from 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, the housing market is hyper-local, so this can vary by location. In some areas, prices may climb even higher, while in others, prices could level off or dip slightly if there’s an increase in inventory. Overall, though, most markets will see prices continue to rise, as is typically the case.

To understand what’s happening in your local market, turn to an agent who can explain the latest trends and what they mean for your plans.

 

Bottom Line

The housing market is always evolving, and 2025 will be no exception. With rates expected to ease slightly and prices rising at a more steady, sustainable pace, staying informed and making a plan that suits you is key.

Let’s connect so you can get the latest updates on our local market and expert advice on making your next move a smart one.