What Do Experts Forecast for the 2025 Housing Market?

By Ron Palmer

Ron Palmer has called the Northwest Valley home for over 20 years, cherishing the area—even its intense summers!

Right now, the No. 1 question I’m getting is, “What’s going to happen to the housing market in 2025?” I get it; many people had plans to move this year but put things on hold due to higher mortgage rates and a slowing market. This begs the question: Will 2025 be any different? The short answer is yes, although there probably won’t be a dramatic shakeup that flips the market on its head. Today, I’m going over what the top experts are forecasting for mortgage interest rates, home prices, and buyer demand in 2025. Plus, I’ll share my insights on how you can prepare for these changes before the new year even starts:

1. Mortgage rates will ease slightly. It’s no secret that higher mortgage interest rates have hurt affordability for buyers and caused our market to slow down. U.S. existing home sales hit a 14-year low in September 2024, and one of the biggest reasons is that would-be buyers are sitting on the sidelines waiting for rates to drop. While Fannie Mae and Freddie Mac aren’t predicting rates to crash to where they were a few years ago, most experts believe rates will fall below the 6% mark for the first time since Q2 of 2022. Since mortgage rates are a key factor in housing affordability, this is fantastic news for buyers sitting on the fence.

2. Home prices will increase slightly. While home prices have stagnated recently or even decreased in some areas of the country, prices are projected to rise in 2025. Different institutions have varying forecasts, but when you average their predictions, prices are expected to rise by 2.6%. This is a modest increase compared to what we’ve seen over the last few years, but it projects stability for our market. Homeowners don’t have to worry about prices crashing, and things will remain relatively affordable for new buyers.

3. More buyers will enter the market. Lower interest rates and steady prices will lead to increased demand for homes. According to the Senior Economist at Wells Fargo, “Lower financing costs will likely boost demand by pulling affordability-crunched buyers off the sidelines.” As these buyers enter the market, the pace will pick up. Homes will sell faster, competition will increase, and supply will decrease as more buyers compete for fewer options.

So, what does this all mean for you? If you want to sell, 2025 is shaping up to be a great year for the market, so I recommend you start planning your move now to get a head start. On the other hand, buyers need to act fast. There will be a very short window where rates are lower, but home prices haven’t yet increased. If you’d like to plan for 2025, whether you’re looking to sell or buy, don’t hesitate to reach out. Call me at 602-750-0755 or email me at ron@soldwithresults.com. I’d love to help you plan your next move!