Looking ahead to 2025, understanding expert predictions for the housing market is crucial. Whether you’re planning to buy or sell a home, having a clear understanding of these forecasts can help you make informed decisions for your homeownership journey.
Here’s an early glimpse at the latest projections for mortgage rates, home sales, and prices in 2025.
Mortgage Rates Expected to Decrease Gradually
Mortgage rates have a profound impact on the housing market. According to forecasts from Fannie Mae, the Mortgage Bankers Association (MBA), the National Association of Realtors (NAR), and Wells Fargo, mortgage rates are anticipated to gradually decrease throughout 2025 (see chart below).
Mortgage rates are expected to decrease, thanks to easing inflation and a modest uptick in unemployment—indicators of a robust yet decelerating economy. Many experts believe these factors will prompt the Federal Reserve to lower the Federal Funds Rate, which typically results in reduced mortgage rates. As Morgan Stanley puts it:
“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.”
Anticipate an Uptick in Home Sales
The housing market is poised to see more activity, with an increase in both the supply of homes and buyer demand. As mortgage rates ease, more potential buyers and sellers who have been waiting on the sidelines are likely to enter the market. This renewed activity is a key reason why experts are forecasting a rise in home sales next year.
Fannie Mae, MBA, and NAR predict a slight increase in total home sales, with an estimated 5.4 million homes expected to be sold in 2025 (see graph below).
This projected increase would mark a modest rise from the lower sales figures seen in 2023 and 2024. To provide some context, approximately 4.8 million homes were sold in 2023, with around 4.5 million expected to sell this year.
While slightly lower mortgage rates may not lead to a dramatic surge in market activity, they are likely to encourage more buyers and sellers to take action. This will result in a greater number of homes available for sale and increased competition among buyers eager to purchase them.
Home Prices Set for Moderate Growth
As more buyers enter the market, the increased demand will continue to put upward pressure on home prices. Below is a look at the latest price forecasts from 10 of the most trusted sources in real estate (see graph below).
On average, experts predict that home prices will rise by about 2.6% nationwide next year. However, there’s some variation in these predictions, with different experts offering slightly different outlooks on how much prices will increase. Despite these differences, there’s a general consensus that home prices will continue to rise moderately in 2025, though at a slower and more typical pace. It’s important to remember that prices can vary significantly depending on your local market.
Bottom Line
Understanding the 2025 housing market forecasts can help you strategically plan your next move. Whether you’re buying or selling, staying informed about these trends will help you make the best possible decision. Let’s connect to discuss how these predictions could influence your plans.
