Wondering what’s in store for the housing market this year? And more specifically, what it all means for you if you plan to buy or sell a home? The best way to get that information is to lean on the pros.

Experts are constantly updating and revising their forecasts, so here’s the latest on two of the biggest factors expected to shape the year ahead: mortgage rates and home prices.

Will Mortgage Rates Come Down?

Everyone’s keeping an eye on mortgage rates and waiting for them to come down. So, the question is really: how far and how fast? The good news is they’re projected to ease a bit in 2025. But that doesn’t mean you should expect to see a return of 3-4% mortgage rates. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:

 “Are we going to go back to 4%? Per my forecast, unfortunately, we will not. It’s more likely that we’ll go back to 6%.”

And the other experts agree. They’re forecasting rates could settle in the mid-to-low 6% range by the end of the year (see chart below):

But you should remember, this will continue to change as new information becomes available. Expert forecasts are based on what they know right now. And since everything from inflation to economic drivers have an impact on where rates go from here, some ups and downs are still very likely. So, don’t get caught up in the exact numbers here and try to time the market. Instead, focus on the overall trend and on what you can actually control.

A trusted lender and an agent partner will make sure you’ve always got the latest data and the context on what it really means for you and your bottom line. With their help, you’ll see even a small decline can help bring down your future mortgage payment.

Will Home Prices Fall?

The short answer? Not likely. While mortgage rates are expected to ease, home prices are projected to keep climbing in most areas – just at a slower, more normal pace. If you average the expert forecasts together, you’ll see prices are expected to go up roughly 3% next year, with most of them hitting somewhere in the 3 to 4% range. And that’s a much more typical and sustainable rise in prices (see graph below):

So don’t expect a sudden drop that’ll score you a big deal if you’re thinking of buying this year. While that may sound disappointing if you’re hoping prices will come down, refocus on this. It means you won’t have to deal with the steep increases we saw in recent years, and you’ll also likely see any home you do buy go up in value after you get the keys in hand. And that’s actually a good thing. 

And if you’re wondering how it’s even possible prices are still rising, here’s your answer. It all comes down to supply and demand. Even though there are more homes for sale now than there were a year ago, it’s still not enough to keep up with all the buyers out there. As Redfin explains:

“Prices will rise at a pace similar to that of the second half of 2024 because we don’t expect there to be enough new inventory to meet demand.”

Keep in mind, though, the housing market is hyper-local. So, this will vary by area. Some markets will see even higher prices. And some may see prices level off or even dip a little if inventory is up in that area. In most places though, prices will continue to rise (as they usually do).

If you want to find out what’s happening where you live, you need to lean on an agent who can explain the latest trends and what they mean for your plans.

Bottom Line

The housing market is always shifting, and 2025 will be no different. With rates likely to ease a bit and prices rising at a more normal and sustainable pace, it’s all about staying informed and making a plan that works for you.

Reach out to a local real estate pro to get the scoop on what’s happening in your area and advice on how to make your next move a smart one.

One of the biggest questions on everyone’s minds right now is: when will mortgage rates come down? After several years of rising rates and a lot of bouncing around in 2024, we’re all eager for some relief.

While no one can project where rates will go with complete accuracy or the exact timing, experts offer some insight into what we might see going into next year. Here’s what the latest forecasts show.

Mortgage Rates Are Expected To Ease and Stabilize in 2025

After a lot of volatility and uncertainty, the most updated forecasts suggest rates will start to stabilize over the next year, and should ease a bit compared to where they are right now (see graph below):

As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says: 

“While mortgage rates remain elevated, they are expected to stabilize.”

Key Factors That’ll Impact the Future of Mortgage Rates

It’s important to note that the timing and the pace of what happens with mortgage rates is one of the most challenging forecasts to make in the housing market. That’s because these forecasts hinge on a few key factors all lining up. So don’t be fooled, because while rates are expected to come down slightly, they’re going to be a moving target. And the ups and downs of ongoing economic drivers will likely stick around. Here’s a look at just a few of the things that’ll influence where they go from here:

• Inflation: If inflation cools, rates could dip a bit more. On the flip side, if inflation rises or remains stubbornly high, rates may stay elevated longer.
• Unemployment Rate: The unemployment rate also plays a significant role in upcoming decisions by the Federal Reserve (the Fed). And while the Fed doesn’t set mortgage rates, their actions do reflect what’s happening in the greater economy, which can have an impact.
• Government Policies: With the next administration set to take office in January, fiscal and monetary policies could also affect how financial markets respond and where rates go from here.

Remember, these forecasts are based on the best information available right now. As new economic data comes out, experts will revise their projections accordingly. So, don’t try to time the market based on these forecasts alone.

Instead, the best thing you can do is focus on what you can control right now. Work on improving your credit score, put away any extra cash for your down payment, and automate your savings. All of these things will help you reach your homeownership goals even faster.

And be sure to connect with a trusted agent and a lender, so you always have the latest updates – and an expert opinion on what that means for your move.

Bottom Line

If you’re planning to move and want to stay informed about where mortgage rates are heading, connect with a trusted agent and lender. 

Some Highlights

• You may be torn between buying a home now or waiting. But don’t forget to factor in the equity you’ll gain as prices rise.
• Experts forecast prices will climb over the next 5 years – and based on those forecasts, you could gain about $90k in equity in that time.
• So, you could wait, but you’ll miss out on a lot of equity if you do. If you’re ready and able to buy, let’s connect so you can start growing your wealth now.