2025 Housing Market Forecasts: What To Expect

Looking ahead to 2025, it’s important to know what experts are projecting for the housing market. And whether you’re thinking of buying or selling a home next year, having a clear picture of what they’re calling for can help you make the best possible decision for your homeownership plans.

Here’s an early look at the most recent projections on mortgage rates, home sales, and prices for 2025.

Mortgage Rates Are Projected To Come Down Slightly

Mortgage rates play a significant role in the housing market. The forecasts for 2025 from Fannie Mae, the Mortgage Bankers Association (MBA), the National Association of Realtors (NAR), and Wells Fargo show an expected gradual decline in mortgage rates over the course of the next year (see chart below):

Mortgage rates are projected to come down because continued easing of inflation and a slight rise in unemployment rates are key signs of a strong but slowing economy. And many experts believe these signs will encourage the Federal Reserve to lower the Federal Funds Rate, which tends to lead to lower mortgage rates. As Morgan Stanley says: "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 will see an increase in both the supply of available homes on the market, as well as a rise in demand, as more buyers and sellers who have been sitting on the sidelines because of higher rates choose to make a move. That’s one big reason why experts are projecting an increase in home sales next year.

According to Fannie Mae, MBA, and NAR, total home sales are forecast to climb slightly, with an average of about 5.4 million homes expected to sell in 2025 (see graph below):

That would represent a modest uptick from the lower sales numbers in 2023 and 2024. For reference, about 4.8 million total homes were sold in 2023, and expectations are for around 4.5 million homes to sell this year.

While slightly lower mortgage rates are not expected to bring a flood of buyers and sellers back to the market, they certainly will get more people moving. That means more homes available for sale – and competition among buyers who want to purchase them.

Home Prices Will Go Up Moderately

More buyers ready to jump into the market will put continued upward pressure on prices. Take a look at the latest price forecasts from 10 of the most trusted sources in real estate (see graph below):

On average, experts forecast home prices will rise nationally by about 2.6% next year. But as you can see, there’s a range of opinions on how much prices will climb. Experts agree, however, that home prices will continue to increase moderately next year at a slower, more normal rate. But keep in mind, prices will always vary by local market.

Understanding 2025 housing market forecasts can help you plan your next move. Whether you're buying or selling, staying informed about these trends will ensure you make the best decision possible. Reach out to a trusted real estate agent to discuss how these forecasts could impact your plans.

As we look ahead to 2025, it's clear the housing market is heading for a more balanced, yet slightly cautious, trajectory. While mortgage rates are projected to ease slightly, they won’t likely drop drastically enough to dramatically shift the landscape overnight. However, even a modest decrease could bring some relief to both buyers and sellers who’ve been waiting on the sidelines for more favorable conditions.

With sales forecasted to pick up and home prices expected to rise moderately, I see 2025 as a year where timing and strategy will be key. Buyers may find opportunities to act before competition intensifies, while sellers could benefit from stronger demand without the frenzied price hikes we’ve seen in the past.

Ultimately, navigating these shifts requires staying informed and understanding how national trends may impact your local market. My advice? Keep a close eye on the gradual movements in interest rates and inventory levels, and work with a trusted real estate professional to ensure you're positioned to make the most of these opportunities as they unfold.

Contact us today to discuss your specific situation and develop a personalized strategy to achieve your real estate goals.

Market Report September 2024

Here's the latest September 2024 Market Update showing year-over-year data. The data includes all Single-family homes, condos & Townhomes in the California Area sourced from MLS Listings for the period from July August thru September 2024. This may include preliminary data and may vary from the time this data was gathered. All data is deemed reliable but not guaranteed. Content from this article is courtesy of Keeping Current Matters.