As we approach 2025 Housing Market, many are curious about what the future holds for the housing market. Whether you’re considering buying or selling a home, understanding the latest projections can help you make informed decisions. Here’s a closer look at what experts are predicting for mortgage rates, home sales, and home prices in the coming year.
Mortgage Rates Are Projected to Come Down Slightly
Mortgage rates significantly impact the housing market, affecting both buyers and sellers. According to forecasts from leading financial institutions like Fannie Mae, the Mortgage Bankers Association (MBA), the National Association of Realtors (NAR), and Wells Fargo, mortgage rates are expected to decrease slightly throughout 2025.
This anticipated decline in mortgage rates is attributed to a combination of factors, including a gradual easing of inflation and a slight rise in unemployment rates, which indicate a strong but slowing economy. As inflation continues to decrease and unemployment rates stabilize, many experts believe the Federal Reserve may lower the Federal Funds Rate, potentially leading to lower mortgage rates. As Morgan Stanley suggests:
“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 housing market is expected to see an increase in both the supply of homes for sale and the demand from buyers. This growth is due to more people entering the market after waiting on the sidelines because of previously higher mortgage rates. As a result, experts predict a rise in home sales for 2025.
According to projections from Fannie Mae, MBA, and NAR, total home sales are expected to increase slightly, with an estimated 5.4 million homes likely to be sold in 2025. This represents a modest uptick compared to the lower sales numbers seen in 2023 and 2024. For context, approximately 4.8 million homes were sold in 2023, and around 4.5 million are expected to be sold in 2024.
While the anticipated decrease in mortgage rates isn’t expected to cause a dramatic surge in market activity, it will likely encourage more buyers and sellers to make a move, leading to increased inventory and more competition among buyers.
Home Prices Will Rise Moderately
With more buyers entering the market, we can expect continued upward pressure on home prices. On average, experts forecast that home prices will rise nationally by about 2.6% in 2025. However, there is a range of opinions on how much prices will increase, depending on the specific local market conditions.
While the anticipated price increase represents a moderate rise compared to recent years, it’s essential to note that price growth will vary by region. Some areas may experience more substantial gains, while others may see slower price appreciation.
Bottom Line
Understanding the 2025 housing market forecasts can help you make informed decisions about buying or selling a home in the coming year. While mortgage rates are expected to decline slightly and home sales are projected to rise, home prices will likely continue to increase moderately. Staying informed about these trends will ensure you make the best decision possible. If you’re considering making a move, reach out to a trusted real estate agent to discuss how these forecasts could impact your plans.