Wondering what the housing market might look like in 2025?

Wondering what the housing market might look like in 2025?  Well, there’s good news ahead! Experts are predicting positive changes, particularly when it comes to two key factors: mortgage rates and home prices.

Whether you're buying or selling, here’s a breakdown of what to expect and how it could affect your decisions.

Mortgage Rates Are Expected to Decrease

Mortgage rates have been a major factor in recent housing market trends, but the outlook for 2025 is promising. After climbing in the past few years, experts predict that rates will gradually decline throughout the year. Keep in mind that it won’t be a sharp drop; the path may have some ups and downs depending on economic data and inflation reports.

The big takeaway? Don’t focus too much on the short-term fluctuations. The long-term trend is what matters.

Lower mortgage rates mean greater affordability. As rates decrease, monthly payments become more manageable, giving you more purchasing power.  However, this will likely bring more buyers back into the market increasing your competition as a home buyer.

Home Prices Are Expected to See Modest Growth

While mortgage rates may ease, home prices are forecasted to rise, though at a much slower rate compared to recent years. Experts project a national average price increase of about 2.5% in 2025.

That’s a far cry from the double-digit spikes we’ve seen in some areas over the past few years, making this growth more sustainable.

So why are prices still rising? It’s all about demand. As buyers return to the market, demand will increase, and sellers will feel less pressure from high mortgage rates. This combination will likely push prices up, but the increase in listings should help keep growth manageable.

Keep in mind, these national projections don’t always reflect what’s happening in every local market. Some regions might see faster price increases, while others may experience slower growth. 

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. 

Bottom Line

With mortgage rates set to ease and home prices expected to grow at a slower, healthier pace, 2025 could be a favorable year for both home buyers and sellers.