Curious about what the housing market has in store for this year? If you're planning to buy or sell a home, it’s important to understand how it affects you. To get the best insights, it’s wise to consult with the experts.

Experts are always refining their predictions, so here’s the current update on two major factors that are likely to influence the coming year: mortgage rates and home prices.

Will mortgage rates decrease soon?

Everyone is closely monitoring mortgage rates, hoping for a decline. The big question is how much and how quickly they will drop. The positive news is that they're expected to ease somewhat in 2025. However, don't anticipate a return to the 3-4% rates we saw in the past. As Lawrence Yun, Chief Economist at the National Association of Realtors, points out:

“ “Are we going to go back to 4%? Per my forecast, unfortunately, we will not. It’s more likely that we’ll go back to 6%.”
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— Lawrence Yun, Chief Economist at the National Association of Realtors (NAR)

The other experts are on the same page, predicting that rates might stabilize in the mid-to-low 6% range by the year's end.

Keep in mind that this situation will evolve as more information comes in. Expert predictions are based on the current knowledge they have. With factors like inflation and economic influences at play, fluctuations in rates are still expected. So, rather than fixating on precise numbers and trying to predict the market, concentrate on the broader trends and on what you can control.

A reliable lender and your agent partner will keep you updated with the latest information and what it truly means for your finances. With their support, you'll realize that even a slight dip can lower your future mortgage payments.

Do you think home prices will go down?

If you're planning to buy this year, don’t count on a sudden drop in prices that would land you a major deal. While that might be a bit discouraging if you're hoping for lower prices, consider this: it means you won't have to experience the sharp increases we saw in the past few years. Plus, any home you do purchase is likely to appreciate in value after you take ownership. And that’s a positive outcome.

If you're curious about why home prices keep going up, it really boils down to supply and demand. Sure, there are more homes on the market now than there were last year, but it still isn’t enough to meet the demand from all the buyers out there. As Redfin puts it:

““Prices will rise at a pace similar to that of the second half of 2024 because we don’t expect there to be enough new inventory to meet demand.”
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— Redfin

It's important to remember that the housing market is very local, so conditions can differ significantly by area. In some places, you might witness even higher prices. Meanwhile, other markets could experience prices stabilizing or even decreasing slightly if there's more inventory available. Generally, though, most areas are likely to see prices continue their upward trend, which is the norm.

To stay informed about what's going on in your area, it's important to work with an agent who can clarify the latest trends and how they impact your goals.

Bottom Line

The housing market is constantly changing, and 2025 will be no exception. With interest rates expected to stabilize a bit and home prices increasing more steadily, it’s important to stay informed and create a plan that suits your needs.

Let's touch base so you can find out what's going on in our area and receive some tips for making your next move a smart decision.