Friday, October 25, 2024 / by Dick Keenan
What To Expect for Mortgage Rates and Home Prices in 2025
Wondering where the housing market is headed in 2025? Experts are predicting promising trends in two critical areas: mortgage rates and home prices. Whether you’re considering buying or selling, here’s what to expect and how it could influence your plans.
Mortgage Rates Likely to Ease
Mortgage rates have been a major factor impacting homebuying decisions, and the outlook for 2025 is encouraging. Experts expect rates to trend down gradually over the next year. While it won’t be a consistent drop, the overall direction should be positive. Rates will respond to economic data and inflation updates as they come in, so there may be some fluctuations along the way, but staying focused on the bigger picture can help.
As rates decrease, affordability improves, meaning monthly mortgage payments are likely to go down, giving buyers more flexibility. Lower rates could bring more buyers into the market, increasing demand. Charlie Dougherty, Senior Economist at Wells Fargo, points out that these lower costs might encourage affordability-conscious buyers to enter the market. To navigate this shift, working with an experienced agent can help you understand how rate changes are impacting demand in your area.
Home Prices Expected to Grow, But More Slowly
While mortgage rates are forecasted to dip, home prices are expected to grow moderately, around 2.5% on average across the U.S. This is much more sustainable compared to the rapid price surges in recent years.
The gradual price increase reflects a likely uptick in buyer demand balanced by a potential rise in listings. As sellers feel less “rate-locked,” more homes may enter the market, keeping price growth in check. However, some areas may experience faster or slower price changes, depending on local demand and supply. As Lance Lambert, Co-Founder of ResiClub, notes, different regions might see varying rates of appreciation or even slight declines in 2025.
Bottom Line
With rates projected to ease and price growth to moderate, 2025 could be a good year for both buyers and sellers. If you’re curious about what these trends mean for you, let’s connect. Having someone by your side who understands your local market can help you make the most of the opportunities ahead.