What to Expect in the 2025 Housing Market

As we settle into 2025, housing market experts are offering optimistic yet measured forecasts for the year ahead. Whether you're planning to buy, sell, or simply evaluate your real estate goals, understanding these predictions can provide valuable insight. Here's a closer look at three major trends expected to shape the housing market in 2025.

Mortgage Rates Are Projected to Come Down Slightly

Good news for prospective homebuyers: mortgage rates are anticipated to ease by the end of 2025. Experts predict that 30-year fixed mortgage rates will settle in the 6-6.5% range. However, there’s a word of caution—volatility may continue before rates stabilize.

The infographic breaks down projections from nine leading organizations, showing an average forecast of 6.36%. While Redfin suggests rates may be slightly higher at 6.8%, other sources like the National Association of Home Builders (NAHB) predict rates as low as 6.12%. This moderation in mortgage rates could provide much-needed relief for buyers seeking to finance their purchases.

Home Prices Are Forecast to Rise

If you’re hoping for a price drop in 2025, you might need to adjust your expectations. Home prices are expected to rise nationally, but at a more measured and sustainable pace compared to the rapid increases seen in previous years. Forecasts show an average price appreciation of 3.0%, with significant regional differences.

The AEI Housing Center leads the pack with a bold 5.5% appreciation forecast, while Morgan Stanley anticipates a modest decline of 0.4%. Most forecasts cluster around moderate growth, making this a balanced year for both buyers and sellers. While rising prices may challenge affordability in some areas, the slower pace signals a more stable market.

More Homes Will Be Available for Sale

Inventory is poised to expand significantly in 2025, giving buyers more options and potentially reducing competition. Experts predict a 15% increase in the number of homes for sale by the end of the year compared to current levels.

As Mike Simonsen, Founder of Altos Research, explains: “2025 is poised to continue the trend of rising inventory across the country. We’ll probably finish 2025 with 15% more homes available than we have now.” This growing inventory could be a game changer for those frustrated by the limited options of previous years.

What Does This Mean for You?

The 2025 housing market presents a mix of opportunities and challenges:

• For Buyers: With slightly lower mortgage rates and more inventory, you may find it easier to locate your ideal home. However, keep rising prices in mind and prepare to act decisively.
• For Sellers: Price appreciation means your property may gain value, but be prepared for increased competition as more homes hit the market.
• For Investors: Stable price growth and expanded inventory provide an opportunity to strategically build your portfolio.

Plan Your Next Move

Whether you're entering the market for the first time or re-evaluating your real estate strategy, staying informed is key. The 2025 forecasts suggest a balanced and evolving housing landscape, making this a pivotal year to align your goals with market trends.

Curious about what this means for your plans? Let’s connect and discuss how these insights can help you achieve your 2025 housing goals!