Are you wondering about the future of the housing market in 2025? Experts are sharing some optimistic predictions, particularly regarding two important factors that will impact your choices: mortgage rates and home prices.

If you're considering buying or selling a home, let's explore what the experts are saying and how this information could influence your decision.

Mortgage Rates Are Forecast To Come Down

One of the main things that could impact your plans is mortgage rates, and the outlook is encouraging. After a significant increase in recent years, experts anticipate that rates will dip a bit throughout 2025.

The decline isn't going to be a steady drop, but it’s expected to continue over the next year. There will likely be some fluctuations along the way since rates will be influenced by new economic data and inflation reports as they come out. However, try not to get too caught up in the minor ups and downs of the market. It’s best to keep your attention on the overall trend.

Lower mortgage rates lead to better affordability. When rates decrease, your monthly mortgage payment goes down, which gives you more options for what you can afford when buying a home.

This change is expected to draw more buyers and sellers back into the market. Charlie Dougherty, Director and Senior Economist at Wells Fargo, shares his insights on this trend.

““Lower financing costs will likely boost demand by pulling affordability-crunched buyers off of the sidelines.”
”

— Charlie Dougherty, Director and Senior Economist at Wells Fargo

As this unfolds, you'll see both the number of homes available and the competition among buyers increase. The key point? You have the chance to stay ahead of that competition right now. Rely on your agent to help you grasp how changes in interest rates are affecting demand in your local market.

Home Price Projections Show Modest Growth

Mortgage rates are anticipated to decrease a bit, while home prices are projected to increase. However, this rise is expected to be much slower compared to the rapid changes we've experienced in recent years.

Experts are predicting that home prices will increase by an average of around 2.5% across the country in 2025.

This is definitely easier to handle compared to the rapid price jumps we saw in previous years, where some markets experienced double-digit growth percentages.

What’s driving the continuous rise in prices? It really comes down to demand. With more buyers coming back into the market, demand is increasing. At the same time, supply is expected to rise too, as sellers start to feel less stuck because of interest rates.

More buyers in markets where inventory is still lower than usual will likely push prices up. However, with an expected increase in home listings, the added supply should help keep price growth manageable. This suggests that while prices will increase, they will do so at a more reasonable and sustainable rate.

These national trends might not perfectly mirror what's going on in your local market. Some places may experience quicker price growth, while others might see more gradual increases. As Lance Lambert, Co-Founder of ResiClub, mentions:

““Even if the average national home price forecast for 2025 is correct, it’s possible that some regional housing markets could see mild home price declines, while some markets could still see elevated appreciation. That has been, after all, the case this year.”
”

— Lance Lambert, Co-Founder of ResiClub

Even the markets that might experience flat or slightly lower prices in 2025 have seen significant appreciation in recent years, so the effect might not be all that noticeable. This is why it's crucial to team up with a local real estate expert who can provide you with a clear understanding of the current situation in the area where you’re planning to buy or sell.

Bottom Line

With mortgage rates anticipated to drop and home prices expected to increase at a steadier rate, 2025 looks like it could be a better year for both buyers and sellers.

If you have any questions about how these trends could affect your plans, let’s get in touch. I'm here to help you understand the market and seize the opportunities that lie ahead.