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 will help you make informed decisions for your homeownership plans.

Here’s an early overview of the latest projections for mortgage rates, home sales, and prices for 2025.

Mortgage Rates Are Projected To Come Down Slightly

Mortgage rates are a key factor in the housing market. Forecasts for 2025 from Fannie Mae, the Mortgage Bankers Association (MBA), the National Association of Realtors (NAR), and Wells Fargo all indicate a gradual decline in mortgage rates over the coming year (see chart below):

Mortgage rates are expected to decrease due to ongoing easing of inflation and a slight increase in unemployment rates, which signal a strong but decelerating economy. Many experts believe these indicators will prompt the Federal Reserve to lower the Federal Funds Rate, typically resulting in reduced 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 anticipated to experience a rise in both the supply of available homes and demand. As more buyers and sellers who have been waiting due to higher rates decide to act, experts project an increase in home sales for the coming year.

Fannie Mae, MBA, and NAR forecast a modest increase in total home sales, with an average of approximately 5.4 million homes expected to be sold in 2025 (see graph below).

This would represent a modest increase from the lower sales figures of 2023 and 2024. For context, approximately 4.8 million homes were sold in 2023, and it's anticipated that around 4.5 million homes will sell this year.

Although slightly lower mortgage rates are not expected to drastically boost the number of buyers and sellers, they will encourage more activity in the market. This means there will be more homes available for sale and increased competition among buyers eager to purchase them.

Home Prices Will Go Up Moderately

An influx of buyers entering the market will likely continue to exert upward pressure on home prices. Review the latest price forecasts from 10 of the most reliable sources in real estate (see graph below):

On average, experts predict a national increase in home prices of about 2.6% next year. However, there is some variation in their forecasts regarding the extent of the price increase. Generally, experts agree that home prices will continue to rise moderately next year, following a slower and more typical rate. Remember, though, that prices can vary significantly depending on the local market.

Bottom Line

Understanding the 2025 housing market forecasts can assist you in planning your next move. Whether you're buying or selling, being aware of these trends will help you make well-informed decisions. Let’s connect to discuss how these forecasts might affect your plans.