Whether you’re planning to buy or sell, here’s a rundown of what experts are saying and what it could mean for you.
Mortgage Rates May Decline
Mortgage rates, a key consideration for many, are expected to dip slightly in 2025. After a steep rise in recent years, experts predict rates will gradually ease (see graph below):
This decline likely won’t be a straightforward downward trend. Expect some fluctuations as rates will depend on new economic data and inflation reports as they come out. However, focusing on the overall trend is key.
Lower mortgage rates make homes more affordable by reducing monthly payments, which can give you more flexibility in what you can afford.
This shift is expected to encourage more buyers and sellers to re-enter the market. As 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.”
As more buyers return, inventory and competition among buyers are likely to pick up. To stay ahead, consider working with your agent to understand how shifting rates are impacting demand in your area.
Home Prices Are Expected to Grow Steadily
While mortgage rates are projected to ease slightly, home prices are expected to rise, though at a slower pace than recent years.
Experts forecast an average national home price increase of about 2.5% in 2025 (see graph below):
This moderate growth rate is a shift from the rapid double-digit increases seen in previous years.
The steady increase in prices is largely due to demand. As more buyers come back into the market, supply is also expected to increase as sellers feel less "rate-locked."
With a rise in both buyers and inventory, prices are likely to grow at a more sustainable pace. Some regions may see faster price growth, while others may experience slower gains or even slight declines. As Lance Lambert, Co-Founder of ResiClub, notes:
“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 others could still experience higher appreciation. This has been the case this year as well.”
In areas where prices might remain stable or drop slightly, the impact may be minimal given the appreciation over recent years. That’s why it’s beneficial to work with a local real estate expert who can offer insights specific to your area.
With mortgage rates expected to ease and home prices set to grow more steadily, 2025 could be a promising year for both buyers and sellers.
