Wondering how the housing market is expected to change in 2025? And more specifically, what it all means for you if you plan to buy or sell a home? As always, the best way to get that information is to consult the pros.

Experts are constantly refining their predictions in response to changes in the market and overall economy. Here’s the latest information on two key factors sure to influence the housing market in 2025: mortgage rates and home prices.

Will Mortgage Rates Come Down?

Mortgage rates remain one of the strongest factors influencing the market, and everyone is waiting for them to come down. The real question is: will they drop, and how quickly?

The good news is that mortgage rates are indeed projected to ease a bit in 2025, falling into the mid-6% range on average. But experts say not to expect a return to 3-4% mortgage rates, at least not this year. 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%.”

Other experts agree with Yun’s 6% prediction. They’re forecasting rates could settle in the mid-to-low 6% range by the end of 2025 (see chart below):

But remember that the market can change quickly, and experts will revise their predictions as the new year continues. Market forecasts are based on what experts 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 most exact numbers and try to time the market. Instead, focus on the overall industry trend and on what you can actually control.

A trusted lender and a local agent partner will make sure you’ve always got the latest data and the context on what it really means for you and your financial goals. With their help, you’ll see that even a small decline in mortgage rates can help bring down your future mortgage payment when you decide to buy.

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 – but 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. But this is a much more typical and sustainable rise in prices compared to (see graph below):

If you’re thinking of buying in 2025, don’t expect a sudden drop to score you a big deal. That may sound disappointing if you’re hoping for home prices to come down, but this means you won’t have to deal with the steep increases we saw in recent years. You’ll also likely see any home you do buy go up in value after you get the keys in hand, and this can turn into a great investment over time.

Like many buyers, you might be wondering how it’s even possible that home prices are still rising. The answer all comes down to supply and demand. Even though there are more homes for sale now than there were in 2024, it’s still not enough to keep up with all the active home buyers on the market. 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 that 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 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 in your local housing market, it always helps to lean on an agent who can explain the latest trends and what they mean for your homeownership plans.

Conclusion

The housing market is always changing, and 2025 will be no different. With mortgage rates likely to ease down to the 6% range and prices rising at a slower, more sustainable pace, it could be a great time to finally buy or sell. As always, it’s all about staying informed and making a plan that works for you.

If you’re in the market to buy or sell a home in 2025, let’s connect you with a local agent who can give expert advice on what’s happening in your area and make sure your next move is a smart one.