As we look toward 2025, it’s crucial to understand the housing market projections from experts. Whether you’re considering buying or selling a home next year, having insight into these expectations can guide you in making informed decisions about your homeownership goals.

Take a look at the latest forecasts for mortgage rates, home sales, and prices heading into 2025.

Mortgage Rates Are Projected To Come Down Slightly

Mortgage rates have a big impact on 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 mortgage rates to gradually decrease over the next year.

Mortgage rates are expected to decrease as inflation continues to ease and unemployment rates rise slightly. These indicators suggest that the economy is strong but slowing down. Many experts think these trends will prompt the Federal Reserve to lower the Federal Funds Rate, which usually results in lower mortgage rates. According to Morgan Stanley:

““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.”
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— Morgan Stanley

Expect More Homes To Sell

The market is expected to see more homes available for sale along with a rise in demand. Many buyers and sellers who have been hesitant due to higher rates are now ready to make a move. This is a significant factor behind experts predicting an uptick in home sales next year.

Fannie Mae, the Mortgage Bankers Association (MBA), and the National Association of Realtors (NAR) have predicted a slight increase in total home sales. They're estimating that around 5.4 million homes will be sold in 2025, as shown in the graph below.

That would show a slight increase compared to the lower sales figures we saw in 2023 and 2024. Just to give you some context, about 4.8 million homes were sold in 2023, and this year, the projections are around 4.5 million homes.

While lower mortgage rates might not lead to a huge surge of buyers and sellers jumping back into the market, they will encourage more people to make a move. This will result in an increase in homes available for sale, leading to more competition among buyers looking to secure those properties.

Home Prices Will Go Up Moderately

With more buyers eager to enter the market, we're likely to see prices continue to rise. Check out the recent price forecasts from 10 of the most reliable sources in real estate (see graph below):

Experts are predicting that, on average, home prices across the country will go up by around 2.6% next year. There's a bit of a range in their opinions regarding how much prices will actually rise. However, they all agree that prices will likely increase moderately at a more typical rate next year. It's important to remember, though, that prices can differ significantly from one local market to another.

Bottom Line

Understanding the housing market forecasts for 2025 can really help you plan your next steps. Whether you’re looking to buy or sell, knowing these trends will put you in a better position to make informed decisions. Let’s talk about how these forecasts might influence your plans.