Curious about what the housing market has in store this year? And more importantly, how it could impact you if you’re planning to buy or sell a home? The best way to stay informed is by relying on the experts.
Since professionals continuously update their forecasts, here’s the latest on two key factors expected to influence the market in the coming year: mortgage rates and home prices.
Will Mortgage Rates Come Down?
Mortgage rates remain a hot topic, with many hoping for a decline. The real question is: how much and how quickly will they drop? The good news is that rates are expected to ease slightly in 2025. However, don’t anticipate a return to the historically low 3-4% rates.
As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains:
“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 share a similar outlook, predicting that rates could settle in the mid-to-low 6% range by the end of the year (see chart below).
Keep in mind that these projections will continue to evolve as new data emerges. Expert forecasts are based on current information, but factors like inflation and broader economic trends will influence where rates go next—meaning some fluctuations are still likely. Rather than trying to time the market based on specific numbers, focus on the overall trend and what you can control.
A trusted lender and real estate agent can provide the latest insights and help you understand how market shifts impact your financial situation. With their guidance, even a slight drop in rates could make a meaningful difference in your future mortgage payment.
Will Home Prices Fall?
The short answer? Probably not. While mortgage rates are expected to decline slightly, home prices are still projected to rise in most areas—just at a more moderate, typical pace. On average, experts predict prices will increase by about 3% next year, with most forecasts landing in the 3-4% range. This represents a more sustainable and historically normal rate of growth (see graph below).
So, if you’re hoping for a sudden price drop to score a great deal this year, that’s unlikely. While this might be disappointing if you were expecting lower prices, consider the upside—home values aren’t rising as sharply as in recent years. Plus, any home you buy now will likely appreciate in value over time, which is a positive for your investment.
Wondering why prices are still climbing? It all comes down to supply and demand. While there are more homes on the market than a year ago, inventory still isn’t high enough to match buyer demand. 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 highly local, meaning trends will vary by area. Some markets may experience even higher price increases, while others could see prices stabilize or even decline slightly if inventory grows. However, in most areas, prices are expected to continue rising, as they typically do.
To understand what’s happening in your specific market, it’s essential to work with a knowledgeable real estate agent who can break down the latest trends and how they impact your buying or selling plans.
Bottom Line
The housing market is constantly evolving, and 2025 will be no exception. With mortgage rates expected to ease slightly and home prices rising at a more typical, sustainable pace, staying informed and having a solid plan is key.
Let’s connect to discuss the latest trends in our local market and explore the best strategies to make your next move a smart one.
