2025 Housing Market Predictions from the Experts

Curious about what the 2025 housing market has in store? Whether you're planning to buy or sell a home, understanding the trends is key. The best way to navigate these changes? Trust the insights of industry experts.

With forecasts being regularly updated, here’s the latest on two critical factors poised to shape the housing landscape this year: mortgage rates and home prices.

Will Mortgage Rates Drop in 2025?

Mortgage rates remain a hot topic, with buyers and sellers alike wondering if relief is on the horizon. The big questions are: how much will they drop, and how soon?

The good news? Experts anticipate a gradual easing of rates in 2025. However, it’s important to manage expectations—those historically low 3-4% mortgage rates aren’t likely to make a comeback anytime soon. 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 echo this sentiment, projecting that mortgage rates could stabilize in the mid-to-low 6% range by the end of 2025. This gradual decrease provides a more balanced outlook for buyers and sellers navigating the market this year (see chart below):

It’s important to keep in mind that these forecasts will evolve as new data emerges. Expert predictions are based on current trends, but factors like inflation and economic shifts can still influence the direction of mortgage rates. That means some fluctuations are inevitable. Rather than trying to time the market, focus on the bigger picture and what’s within your control.

A trusted lender and a real estate agent can provide up-to-date insights and help you understand how even a small drop in rates could reduce your future mortgage payment. Their guidance ensures you’re always informed and prepared to make the best decision for your financial goals.

Will Home Prices Decline?

In short: probably not. While mortgage rates are expected to ease, home prices are likely to continue climbing, albeit at a more moderate pace. On average, experts forecast home prices to rise around 3% in 2025, with most predictions landing in the 3-4% range. This marks a return to a more typical and sustainable rate of growth (see graph below):

Why Are Home Prices Still Rising?

Don’t count on a sudden price drop to score a major deal if you’re planning to buy in 2025. While this might sound disappointing, there’s a silver lining: you won’t face the dramatic price hikes seen in recent years, and any home you purchase is likely to appreciate in value once you’ve moved in. That’s a win for your long-term investment.

So, why are prices still climbing? It’s all about supply and demand. While the number of homes for sale has increased compared to last year, inventory remains far below what’s needed to meet buyer demand. As Redfin puts it:

"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.”

It’s important to remember that the housing market varies significantly by location. While many areas will experience continued price growth, some markets may see prices stabilize or even dip slightly if inventory levels increase. However, in most regions, home prices are expected to keep rising, as they typically do over time.

If you’re curious about what’s happening in your area, the best approach is to connect with a local real estate agent. They can provide you with up-to-date market trends and insights tailored to your neighborhood, helping you make informed decisions that align with your goals.

Bottom Line

The housing market is always shifting, and 2025 will be no different. With rates likely to ease a bit and prices rising at a more normal and sustainable pace, it’s all about staying informed and making a plan that works for you.

Let’s connect so you can get the scoop on what’s happening in our area and advice on how to make your next move a smart one.