Curious about the housing market outlook for this year? If you’re considering buying or selling a home, the best insights come from trusted professionals.
Experts continue to update their forecasts, focusing on two key factors shaping the year ahead: mortgage rates and home prices.
Are Mortgage Rates Expected to Drop?
Mortgage rates remain a key focus, with many wondering how far and how quickly they might decrease. While rates are projected to ease somewhat in 2025, a return to the 3-4% range isn’t likely. Lawrence Yun, Chief Economist at the National Association of REALTORS® (NAR), explains:
“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 share a similar outlook, projecting that rates could stabilize in the mid-to-low 6% range by the end of the year (see chart below):
However, it’s important to note that forecasts can change as new information emerges. Experts base their predictions on current data, but factors like inflation and economic conditions can influence where rates move next. Expect some fluctuations, but focus on the overall trend and what you can control rather than trying to time the market precisely.
A reliable lender and Benson & Mangold agent will provide you with the most up-to-date information and insights on what it means for you financially. With their guidance, even a slight decline in rates can significantly reduce your future mortgage payment.
Will Home Prices Decrease?
The short answer? Unlikely. While mortgage rates are expected to ease, home prices are projected to continue rising, though at a slower, more balanced pace. On average, expert forecasts suggest a 3% increase in prices next year, with most estimates falling in the 3 to 4% range. This is a more typical and sustainable rate of growth (see graph below):
So, don’t anticipate a sudden drop that would offer a major deal if you’re planning to buy this year. While that may seem discouraging if you’re hoping for lower prices, it’s worth considering this: you won’t face the sharp price increases of recent years, and any home you purchase is likely to appreciate in value over time. That’s a positive outcome.
If you’re wondering how home prices are still rising, it’s simple—supply and demand. Despite an increase in the number of homes available compared to last year, it still isn’t enough to meet the demand from eager buyers. 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.”
Remember, the housing market is highly localized, so trends can vary by region. In some areas, prices may rise even more, while others could see prices stabilize or even decrease slightly if inventory is high. However, in most markets, prices are expected to continue climbing.
To get a clear picture of what’s happening in your local market, rely on a Benson & Mangold agent who can break down the latest trends and how they impact your specific plans.
Key Takeaway
The housing market is constantly evolving, and 2025 will be no exception. With mortgage rates expected to ease and prices rising at a steadier, more sustainable rate, staying informed and crafting a plan that suits your needs is key.
Reach out to a Benson & Mangold agent to stay updated on local market trends and receive expert guidance to make your next move a smart one.
