2025 Housing Market Forecast: Key Trends to Watch
As we look ahead to the 2025 housing market, it's essential to understand the trends that could shape the landscape for both buyers and sellers. Knowing what to expect will help you make informed decisions about your homeownership journey, whether you're planning to buy, sell, or stay put.
Here’s what experts are projecting for mortgage rates, home sales, and prices in 2025.
Mortgage Rates Expected to Gradually Decline
Mortgage rates play a pivotal role in the housing market, affecting both affordability and market activity. According to forecasts from Fannie Mae, the Mortgage Bankers Association (MBA), and the National Association of Realtors (NAR), mortgage rates are expected to ease slightly in 2025.
This anticipated decline is tied to signs of a slowing economy, including lower inflation and a slight uptick in unemployment. These factors may prompt the Federal Reserve to reduce the Federal Funds Rate, which could lead to a gradual drop in 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.”
Lower mortgage rates can increase affordability for buyers, leading to more activity in the housing market.
A Moderate Increase in Home Sales
In 2025, experts predict a moderate rise in home sales, fueled by more buyers and sellers who’ve been holding off due to high rates in previous years. Fannie Mae, MBA, and NAR all forecast an uptick in sales, with an expected total of around 5.4 million homes sold in 2025.
For comparison, approximately 4.8 million homes were sold in 2023, with a projected dip to 4.5 million sales in 2024. While the increase in sales won’t be dramatic, the combination of slightly lower mortgage rates and pent-up demand from both buyers and sellers will contribute to more homes hitting the market and increased competition among buyers.
Home Prices to Rise, but at a Slower Pace
While the market may see more activity, home prices are expected to increase at a more moderate pace than in recent years. On average, experts project a 2.6% national increase in home prices in 2025, though local markets will experience different rates of appreciation.
This steadier price growth reflects a more balanced market, where supply and demand are expected to be in closer alignment. Even with more homes entering the market, buyer demand will continue to push prices up, though not as sharply as during the pandemic-driven housing boom.
Bottom Line
Staying informed about the 2025 housing market trends is crucial for making smart real estate decisions. Whether you're planning to buy or sell, understanding how mortgage rates, home sales, and prices are projected to shift will help you strategize your next move.
Ready to take the next step? Contact me today to discuss how these forecasts could impact your real estate goals and let's create a plan to help you succeed in the 2025 market. Don't wait—let's start preparing for your future now!
Ready to discuss your options? Schedule a free consultation with me through my Calendly link, and let's create a strategy that works for you!
Sources: * 2025 Housing Market Forecasts: What To Expect” by Keeping Current Matters