2025 Housing Market Outlook: What You Need to Know to Make Your Best Move!

Looking ahead to 2025, it's crucial to understand what experts are predicting for the housing market. Whether you're thinking about buying or selling a home next year, having a clear picture of the market outlook can help you make the best decisions for your homeownership goals. 🏡✨

Here's a sneak peek at the most recent projections on mortgage rates, home sales, and prices for 2025.

Mortgage Rates Are Projected To Come Down Slightly 📉

Mortgage rates play a significant role in shaping the housing market. According to forecasts from Fannie Mae, the Mortgage Bankers Association (MBA), the National Association of Realtors (NAR), and Wells Fargo, we can expect a gradual decline in mortgage rates throughout the next year.

Why the expected drop? It’s largely due to the easing of inflation and a slight rise in unemployment rates—key indicators of a strong but slowing economy. Many experts believe these signs will encourage the Federal Reserve to lower the Federal Funds Rate, which typically 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.”

Expect More Homes To Sell 🏘️

The market is likely to see an increase in both the supply of homes available and a rise in demand, as more buyers and sellers who’ve been holding off due to higher rates decide it’s time to make a move. This is one of the main reasons why experts are predicting an increase in home sales next year.

According to Fannie Mae, MBA, and NAR, total home sales are expected to rise slightly, with around 5.4 million homes projected to sell in 2025. That’s a modest increase from the lower sales numbers we’ve seen in 2023 and 2024. For perspective, about 4.8 million homes were sold in 2023, and expectations are for approximately 4.5 million homes to sell this year.

While slightly lower mortgage rates may not cause a massive surge in buyers and sellers, they will likely encourage more activity in the market. This means more homes available for sale and healthy competition among buyers eager to make a purchase.

Home Prices Will Go Up Moderately 📈

As more buyers jump into the market, we'll see continued upward pressure on prices. According to the latest price forecasts from 10 trusted real estate sources, home prices are expected to rise nationally by an average of 2.6% next year. Although there’s a range of opinions on how much prices will climb, experts agree that home prices will continue to increase moderately in 2025 at a slower, more sustainable rate. Keep in mind, however, that prices will always vary by local market.

Bottom Line 💬

Understanding the housing market forecasts for 2025 can help you plan your next move with confidence. Whether you're buying or selling, staying informed about these trends ensures you make the best decision possible. If you’re ready to discuss how these projections might impact your plans, contact Krista Klause and her team—they’d love to help! 😊📞

Let's make 2025 your best year yet in real estate! 🎉