2025 Housing Market Outlook: What to Anticipate

As we approach 2025, understanding expert predictions for the housing market is crucial, whether you're considering buying or selling a home. Gaining insight into these forecasts can provide you with the information needed to make informed decisions regarding your homeownership goals.

Here's an overview of the latest predictions on mortgage rates, home sales, and prices for 2025.

Mortgage Rates Expected to Ease Slightly

Mortgage rates are a key driver in the housing market. According to projections from industry leaders like 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. (see graph below):

The expected decrease in mortgage rates is tied to ongoing inflation easing and a modest rise in unemployment, both indicators of a robust yet decelerating economy. Many experts believe these factors will prompt the Federal Reserve to lower the Federal Funds Rate, which typically leads to lower mortgage rates. As noted by Morgan Stanley:

“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.”

Anticipating Increased Home Sales

The housing market is expected to see a boost in both the availability of homes and the number of buyers and sellers. This increased activity is largely due to more people entering the market after sitting on the sidelines due to higher mortgage rates. Consequently, experts are forecasting a rise in home sales in 2025.

Fannie Mae, MBA, and NAR predict that total home sales will experience a modest increase, with an estimated 5.4 million homes expected to be sold in 2025. This marks an improvement from the lower sales figures of 2023 and 2024. For context, approximately 4.8 million homes were sold in 2023, with 2024's expectations hovering around 4.5 million. (see graph below)

Home Prices to Experience Moderate Growth

As more buyers enter the market, the demand will continue to exert upward pressure on home prices. According to predictions from ten of the most reputable sources in real estate, home prices are expected to increase nationally by about 2.6% in 2025. (see graph below)

However, opinions on the exact amount of growth vary, with all experts agreeing on a moderate rise in prices at a slower, more typical pace. It's important to remember that price trends can differ significantly depending on the local market.

Final Thoughts

Staying informed about the 2025 housing market forecasts is essential for planning your next move. Whether you're buying or selling, understanding these trends will help you make the best possible decisions. Let’s connect to discuss how these forecasts might influence your real estate plans.