As we look ahead to 2025, understanding the housing market forecasts can help you make informed decisions about buying or selling a home. Whether you're a prospective buyer or seller, staying updated on expert projections can guide your homeownership plans.
Here’s a preview of what experts are forecasting for mortgage rates, home sales, and prices in 2025.
Mortgage Rates Expected to Gradually Decrease
Mortgage rates significantly influence the housing market. According to predictions from Fannie Mae, the Mortgage Bankers Association (MBA), the National Association of Realtors (NAR), and Wells Fargo, we can expect a slight decline in mortgage rates throughout 2025.
This anticipated decrease is largely due to easing inflation and a slight rise in unemployment, indicators of a robust yet decelerating economy. Many experts believe these factors will prompt the Federal Reserve to reduce the Federal Funds Rate, which often leads to lower mortgage rates. As Morgan Stanley puts it:
“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.”
Increased Home Sales on the Horizon
With the expectation of slightly lower mortgage rates, both the supply of available homes and buyer demand are likely to rise. Many buyers and sellers who have been hesitant due to higher rates may decide to enter the market, leading to an uptick in home sales.
Fannie Mae, MBA, and NAR project that total home sales will see a modest increase, with around 5.4 million homes expected to sell in 2025. This would be an improvement from the approximately 4.8 million homes sold in 2023 and the anticipated 4.5 million sales this year.
While the decrease in mortgage rates may not cause a sudden surge in market activity, it will likely encourage more movement, leading to increased competition among buyers.
Moderate Home Price Growth Expected
As more buyers enter the market, home prices are expected to continue rising, though at a more moderate pace. The latest forecasts from ten leading real estate sources predict an average national price increase of about 2.6% in 2025. While there’s some variation in these predictions, experts agree that home prices will rise at a slower, more sustainable rate. However, it's essential to remember that price changes can vary significantly by location.
Being aware of the 2025 housing market forecasts can help you make strategic decisions. Whether you're planning to buy or sell, staying informed about these trends will position you to make the best possible choices. For personalized advice on how these forecasts might affect your plans, consider consulting a trusted real estate agent.
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