2025 Housing Market Forecasts: What To Expect

2025 Housing Market Forecasts: What To Expect

As we look ahead to 2025, it's crucial to understand what experts are forecasting for the housing market. Whether you're considering buying or selling a home next year, having a clear understanding of these projections can help you make the best decisions for your homeownership plans.

Here's an early glimpse at the latest predictions for mortgage rates, home sales, and prices in 2025.

Mortgage Rates Are Projected To Come Down Slightly

Mortgage rates are a key factor in the housing market. According to forecasts for 2025 from Fannie Mae, the Mortgage Bankers Association (MBA), the National Association of Realtors (NAR), and Wells Fargo, we can expect a gradual decline in mortgage rates throughout the year (see the chart below):

Mortgage rates are expected to decrease because the continued easing of inflation and a slight increase in unemployment rates are key indicators of a strong yet slowing economy. Many experts believe these factors will prompt the Federal Reserve to lower the Federal Funds Rate, which typically results in 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.”

Expect More Homes To Sell

The market is expected to experience a boost in both the supply of available homes and a rise in demand, as more buyers and sellers who have been hesitant due to higher rates decide to take action. This increased activity is a major reason why experts are forecasting a rise in home sales next year.

According to Fannie Mae, MBA, and NAR, total home sales are projected to increase slightly, with an average of about 5.4 million homes expected to sell in 2025 (see the graph below):

This would mark a modest increase from the lower sales numbers seen in 2023 and 2024. For context, approximately 4.8 million homes were sold in 2023, with expectations of around 4.5 million homes selling this year.

While slightly lower mortgage rates aren't expected to bring a sudden surge of buyers and sellers back to the market, they will likely motivate more people to act. This means more homes available for sale and increased competition among buyers eager to purchase them.

Home Prices Will Go Up Moderately

An increase in buyers entering the market will likely continue to drive prices upward. To get a sense of what to expect, check out the latest price forecasts from 10 of the most trusted sources in real estate (see the graph below):

On average, experts predict that home prices will rise nationally by about 2.6% next year. However, as you can see, there’s a range of opinions on the extent of this increase. Despite the differences, experts agree that home prices will continue to rise moderately at a slower, more typical pace next year. It's important to remember that prices will vary depending on the local market.

Bottom Line

Understanding the 2025 housing market forecasts can help you plan your next move with confidence. Whether you're buying or selling, staying informed about these trends will enable you to make the best possible decision. Let's connect to discuss how these forecasts might influence your plans.