Wondering what’s coming next for the housing market? Good news: experts are predicting some encouraging trends for 2025, especially when it comes to two things that are front and center for buyers and sellers—mortgage rates and home prices.
Whether you're thinking of selling, buying, or both, here's what the pros are forecasting and how it might shake things up for your real estate plans.
Mortgage Rates Are Likely Heading Down
We all know mortgage rates have been wild these past few years. The forecast for 2025 brings a bit of relief: rates are expected to ease throughout the year (check out the graph below).
This drop won't happen overnight. It’ll be more like a rollercoaster with ups and downs, since the rates will shift with new economic data and inflation reports. But don’t stress over every little market reaction. Keep your eyes on the big picture.
Lower mortgage rates mean your monthly payment could shrink, giving you some much-needed breathing room in your budget if you’re buying a home. When rates ease, more buyers are likely to jump back into the game, which will also bring more sellers to the table.
Charlie Dougherty, Director and Senior Economist at Wells Fargo, sums it up perfectly:
“Lower financing costs will likely boost demand by pulling affordability-crunched buyers off of the sidelines.”
Increased demand could spark more competition, especially in areas where homes are still in short supply. That’s why it’s key to stay ahead of the curve and work with your real estate agent to understand how rate changes are shifting demand in your area.
Home Prices: Modest Growth, Not a Frenzy
While mortgage rates are set to cool off, home prices are still on the rise—but the crazy double-digit increases of recent years? Those are behind us. Experts predict home prices will grow by about 2.5% nationwide in 2025 (graph coming your way below).
Why the continued rise in prices? It comes down to the same old supply and demand game. As buyers re-enter the market thanks to better rates, sellers will follow. Even so, some areas may still see limited inventory, which could nudge prices up.
More homes hitting the market will help keep price growth in check, though. The market will feel a bit healthier—no more runaway prices, just steady, sustainable increases.
Now, remember: these national trends don’t always mirror what’s happening in your neck of the woods. Some places may see prices rise faster, and others might see only slight changes. As Lance Lambert, Co-Founder of ResiClub, explains:
“Even if the average national home price forecast for 2025 is correct, it’s possible that some regional housing markets could see mild home price declines, while some markets could still see elevated appreciation. That has been, after all, the case this year.”
Even markets with slight dips in prices have already experienced significant appreciation, so any shift might not feel drastic. This is where having a local expert in your corner is invaluable—they’ll know exactly how the market’s moving in your area.
Bottom Line
With mortgage rates trending down and home prices leveling off to a manageable pace, 2025 looks promising for buyers and sellers alike.
Got questions about how these trends could impact your real estate plans? Let’s chat! Having someone on your side to help you navigate these shifts ensures you’re ready to make the most of the opportunities headed your way.
