The 2025 Housing Market - Expert Forecasts

Are you curious about the 2025 housing market and what it may bring this year? More precisely, what does it all mean to you if you intend to purchase or sell a house? Leaning on the experts is the greatest approach to obtain that knowledge.

Experts are always updating and modifying their estimates, so here's the latest on two of the most important aspects likely to define the coming year: mortgage rates and house prices.

Will Mortgage Rates Fall?

Everyone is closely monitoring mortgage rates, anticipating a decline. So, the actual question is, "How far and how fast?" The good news is that they're expected to ease slightly in 2025. However, this does not imply that mortgage rates will revert to 3-4%. Drzewiecki (2024) shared that Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), has stated:

“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%.”

The other experts also now agree. They expect rates to stabilize in the mid-to-low 6% level by the end of the year (see chart below):

Keep in mind, though, that this will keep changing as new information comes in. Their predictions are based on what they know at this very moment. There will probably still be some ups and downs because of things like inflation and economic factors that affect rates. Don't worry about the exact numbers, and try to time the market. Instead, pay attention to the big picture and the things you can control.

A great Realtor partner and a reliable lender will ensure that you always have access to the most recent information and the context of what it actually means for you and your bottom line. Even a slight decrease can help lower your future mortgage payment with their assistance.

Will the Value of Homes Decline?

The brief reply is not very likely. In most places, housing prices are predicted to keep rising while mortgage rates are expected to relax—only at a slower, more regular pace. If you average the expert projections, most of them fall between the 3 to 4% range, and prices are likely to rise around 3% next year. And that is a far more normal and sustainable increase in pricing (graph below).

Therefore, if you're considering making a purchase this year, don't anticipate a sharp decline that will result in a significant discount. Refocus on this, even though it could sound disappointing if you were looking for a price reduction. It means you won't have to cope with the sharp hikes we've seen in recent years, and any home you do purchase will probably appreciate in value once you get the keys. In fact, that's a positive thing.

And here's your explanation if you're wondering how it's even feasible prices are still rising. Supply and demand define it all. More homes for sale today than there were a year ago, but still not enough to meet all the demand of the current buyers. Per Fairweather and Zhao (2024), Redfin notes:

“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, too, the property market is hyperlocal. This will therefore change depending on the locality. Prices in some markets will be considerably higher. And if inventories in that location grow, some could notice prices level out or even slightly decline. Most places, however, will see ongoing price increases—as they typically do.

You should rely on an agent who can clarify the newest trends and their implications for your goals if you wish to know what is happening near your house.

In Conclusion

The property market is continually changing; 2025 will not be different. It's all about keeping educated and creating a strategy that fits you since rates probably will relax a little and prices are rising at a more regular and sustainable rate.

Let's get in touch so you may learn about your own neighborhood and obtain guidance on how to make wise decisions for your next move.

References

Drzewiecki, E. D. (2024, November 11). The NAR Chief Economist offers a blended forecast for 2025 and 2026. National Mortgage Professional. Retrieved January 7, 2025, from https://nationalmortgageprofessional.com/news/nars-yun-predicts-6-8-rate-cuts-over-next-two-years

Fairweather, D., & Zhao, C. (2024, December 3). Redfin’s 2025 predictions: Pent-Up demand will lead to more home sales, but many Would-Be buyers will opt to rent. Redfin Real Estate News. https://www.redfin.com/news/housing-market-predictions-2025/