As we look ahead to 2025, it’s essential to understand what experts are predicting for the housing market. Whether you’re considering buying or selling a home next year, having a clear understanding of the projected trends can help you make well-informed decisions about your real estate plans.

Here’s a closer look at the latest forecasts for mortgage rates, home sales, and home prices in 2025.

Mortgage Rates Expected To Gradually Decline

Mortgage rates are a key factor in the housing market, influencing affordability for buyers and overall market activity. 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 decrease slightly throughout 2025.

This expected decline in mortgage rates is largely attributed to the easing of inflation and a modest increase in unemployment rates—indicators of a strong but slowing economy. Many experts believe these economic conditions will prompt the Federal Reserve to lower the Federal Funds Rate, which typically leads to lower mortgage rates. As Morgan Stanley notes:

“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.”

An Uptick in Home Sales

In 2025, we can anticipate a rise in both the supply of homes on the market and the number of buyers entering the market. This is largely due to more buyers and sellers who have been holding back because of higher mortgage rates deciding to make a move. This expected increase in market activity is one of the reasons experts are forecasting a boost in home sales next year.

According to projections from Fannie Mae, MBA, and NAR, total home sales are expected to climb slightly, with around 5.4 million homes anticipated to sell in 2025. This represents a modest increase from the lower sales figures seen in 2023 and 2024, where approximately 4.8 million homes were sold in 2023, and around 4.5 million homes are expected to sell this year.

While slightly lower mortgage rates aren’t likely to cause a massive surge in buyers and sellers, they will encourage more people to enter the market, leading to more homes available for purchase and increased competition among buyers.

Home Prices Will Rise at a Moderate Pace

As more buyers enter the market, the increased demand will continue to push home prices upward. The latest forecasts from 10 trusted real estate sources suggest that home prices will rise nationally by an average of 2.6% in 2025. While opinions on the exact rate of increase vary, experts agree that home prices will continue to climb at a more moderate, stable pace next year.

It’s important to remember that home prices can vary significantly depending on the local market. While national trends provide a general overview, local factors will always play a significant role in determining price changes in your area.

Bottom Line

Understanding the 2025 housing market forecasts is crucial for planning your next move. Whether you’re thinking of buying or selling, staying informed about these trends will help you make the best possible decisions. Let’s connect to discuss how these forecasts could influence your real estate plans.