2025 Housing Market Outlook

As we approach 2025, staying informed about the projected trends in the housing market is crucial, whether you’re planning to buy or sell a home in the coming year. Having a clear understanding of expert forecasts can guide your decisions and help you navigate the market with confidence.

Below, we delve into the latest projections for mortgage rates, home sales, and home prices in 2025, providing you with a comprehensive overview of what to anticipate.

Mortgage Rates Expected To Decline Slightly

Mortgage rates are a pivotal factor in the housing market, influencing both affordability and demand. According to forecasts from leading institutions such as Fannie Mae, the Mortgage Bankers Association (MBA), the National Association of Realtors (NAR), and Wells Fargo, mortgage rates are anticipated to decline gradually throughout 2025.

This expected decrease is largely attributed to continued easing of inflation and a slight uptick in unemployment rates, indicators of a robust yet decelerating economy. Many experts believe these economic conditions will prompt the Federal Reserve to reduce the Federal Funds Rate, which typically leads to 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.”

Increase in Home Sales Anticipated

The 2025 housing market is expected to witness an uptick in both the supply of homes and the number of transactions. As mortgage rates gradually decrease, more potential buyers and sellers who have been hesitant due to higher rates are likely to re-enter the market. This renewed activity is a key reason why experts are forecasting a rise in home sales for the upcoming year.

Projections from Fannie Mae, MBA, and NAR suggest that total home sales could reach approximately 5.4 million units in 2025, marking a modest increase from the lower sales figures seen in 2023 and 2024. To provide context, around 4.8 million homes were sold in 2023, with expectations for about 4.5 million sales this year.

While slightly lower mortgage rates may not trigger a significant surge in market activity, they are expected to stimulate more movement, resulting in an increased number of homes available for sale and heightened competition among buyers.

Home Prices Set for Moderate Growth

With more buyers poised to enter the market, upward pressure on home prices is expected to persist. The latest forecasts from 10 of the most reliable sources in real estate suggest that home prices will rise by an average of 2.6% nationwide in 2025.

However, it’s important to note that these predictions vary, reflecting a range of opinions on how much prices will climb. The consensus among experts is that home prices will continue to increase at a moderate pace, in line with a more typical rate of growth. As always, price trends will differ across local markets.

Bottom Line

Gaining insight into the 2025 housing market forecasts is essential for making informed decisions, whether you’re considering buying or selling a home. Staying updated on these trends will help you strategize effectively and ensure you make the most informed choice for your real estate plans. Let’s connect to discuss how these forecasts could influence your next move.