What To Expect from Mortgage Rates and Home Prices in 2025

Curious about what the housing market will look like in 2025? If you’re thinking of buying or selling, the forecasts for mortgage rates and home prices might influence your decisions. The good news is, experts are predicting positive changes on both fronts.

Here’s what you can expect from the housing market in 2025 and how it may impact your next move.

Mortgage Rates Are Projected To Decrease

One of the most important factors for homebuyers is mortgage rates, and experts are predicting a decline throughout 2025. While rates have climbed significantly over the past few years, the forecast shows a gradual decrease on the horizon.

Although the decline in mortgage rates won’t be a smooth, straight drop, the overall trend should point downwards. Fluctuations will likely occur based on new economic data, inflation, and reactions from the market. However, the big picture indicates improving affordability as rates ease. Lower mortgage rates mean reduced monthly payments, giving you more financial flexibility when purchasing a home.

As mortgage rates come down, more buyers are expected to return to the market. Charlie Dougherty, Director and Senior Economist at Wells Fargo, explains:

“Lower financing costs will likely boost demand by pulling affordability-crunched buyers off of the sidelines.”

This surge in buyer demand could also increase competition for homes. If you’re planning to buy, acting sooner rather than later could help you get ahead of this competition. Partner with a trusted real estate agent to stay informed about how changing rates affect your local market.

Home Prices Will See Moderate Growth

Along with easing mortgage rates, home prices are also expected to rise, though at a more manageable pace than recent years. Experts project that home prices will increase by 2.5% nationally in 2025, which is significantly lower than the double-digit growth seen in some markets over the past few years.

This moderate price growth is tied to increasing demand as more buyers enter the market. However, the rise in new listings from sellers who are no longer rate-locked will help balance the market. While prices are projected to grow, the increased supply should help keep these gains at a healthier, more sustainable level.

Keep in mind that national trends don’t always reflect local realities. Some markets may experience faster price growth, while others could see slower gains. Lance Lambert, Co-Founder of ResiClub, explains:

“Even if the average national home price forecast for 2025 is correct, it’s possible that some regional housing markets could see mild home price declines, while some markets could still see elevated appreciation.”

Working with a local real estate expert can help you understand what’s happening in your specific area and make informed decisions based on regional trends.

Bottom Line

With mortgage rates projected to decline and home prices expected to rise at a more moderate pace, 2025 is shaping up to be a favorable year for both buyers and sellers. Whether you’re planning to make a move or just exploring your options, it’s crucial to stay informed about the evolving market. Let’s connect to discuss how these trends might impact your buying or selling plans and ensure you’re ready to seize upcoming opportunities.