What To Expect from Mortgage Rates and Home Prices in 2025

<article class="post-1239969 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-1239969"><span class="entry-date">October 21, 2024</span><div class="entry-header center-block text-center"><h1 class="entry-title">What To Expect from Mortgage Rates and Home Prices in 2025</h1><div class="shareBlock"><div class="shareTitle">Share</div><div class="shareIcons"><a aria-label="Twitter Share Link" class="twitter solid display-inline-block" data-tracking="Post,Social Post Link Clicked,Twitter" href="http://twitter.com/share?text=What+To+Expect+from+Mortgage+Rates+and+Home+Prices+in+2025&amp;url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Fwhat-to-expect-from-mortgage-rates-and-home-prices-in-2025%2F" target="_blank"><span class="force-hidden">Twitter</span></a>
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</div></div><div class="post-tax post-category"><span></span><a href="../category/realtor-blog/index.html" rel="tag">Realtor Blog</a></div><div class="post-tax post-post_tag"></div></div><div class="entry-content"><div><img alt="What To Expect from Mortgage Rates and Home Prices in 2025 Simplifying The Market" decoding="async" loading="lazy" src="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20241017/20241021-What-To-Expect-from-Mortgage-Rates-and-Home-Prices-in-2025-original.png" style="display: block; margin-bottom: 5px; clear: both; max-width: 100%;" width=""/>
<p>Curious about where the housing market is headed in 2025? The good news is that experts are offering some promising forecasts, especially when it comes to two key factors that directly affect your decisions: <a href="https://www.simplifyingthemarket.com/2024/09/20/lower-mortgage-rates-boost-your-buying-power-infographic/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">mortgage rates</a> and <a href="https://www.simplifyingthemarket.com/2024/10/03/home-values-rise-even-as-median-prices-fall/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">home prices</a>.</p>
<p>Whether you’re thinking of buying or selling, here’s a look at what the experts are saying and how it might impact your move.</p>
<h4><strong>Mortgage Rates Are Forecast To Come Down </strong></h4>
<p>One of the biggest factors likely affecting your plans is mortgage rates, and the <a href="https://www.fanniemae.com/media/53421/display" rel="noopener noreferrer" target="_blank">forecast</a> looks positive. After rising dramatically in recent years, <a href="https://img03.en25.com/Web/MortgageBankersAssociation/%7B497ab7d7-e310-4609-b693-054c670afa77%7D_Mortgage_Finance_Forecast_Sep_2024.pdf" rel="noopener noreferrer" target="_blank">experts</a> project <a href="https://wellsfargo.bluematrix.com/links2/html/c7bc8df9-ed90-48e0-9877-be99a9034517" rel="noopener noreferrer" target="_blank">rates</a> will <a href="https://www.nar.realtor/sites/default/files/2024-10/forecast-q3-2024-us-economic-outlook-10-04-2024.pdf" rel="noopener noreferrer" target="_blank">ease</a> slightly throughout the course of 2025 (<em>see graph below</em>):</p>
<p><a href="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20241017/20241021-Mortgage-Rates-and-Projections-original.png" rel="noopener noreferrer" target="_blank"><img alt="a graph showing the rate of a forecast" decoding="async" src="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20241017/20241021-Mortgage-Rates-and-Projections-original.png"/></a>While that decline won’t be a straight line down, the overall trend should continue over the next year. Expect a few bumps along the way, because the trajectory of rates will depend on new economic data and inflation numbers as they’re released. But don’t get too hung up on those blips and reactions from the market as they happen. Focus on the bigger picture.</p>
<p>Lower mortgage rates mean <a href="https://www.simplifyingthemarket.com/2024/10/04/the-top-3-reasons-affordability-is-improving-infographic/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">improving affordability.</a> As rates come down, your monthly mortgage payment decreases, giving you more flexibility in what you can afford if you buy a home.</p>
<p>This shift will likely bring more buyers and sellers back into the market, though. As Charlie Dougherty, Director and Senior Economist at <em>Wells Fargo</em>, explains:</p>
<blockquote><p><em>“Lower financing costs will likely boost demand by pulling affordability-crunched buyers off of the sidelines.”</em></p></blockquote>
<p>As that happens, both inventory and <a href="https://www.simplifyingthemarket.com/2024/10/01/this-is-the-sweet-spot-homebuyers-have-been-waiting-for/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">competition</a> among buyers will ramp back up. The takeaway? You can get ahead of that competition now. Lean on your agent to make sure you understand how the shifts in rates are impacting demand in your area.</p>
<h4><strong>Home Price Projections Show Modest Growth</strong></h4>
<p>While mortgage rates are expected to come down slightly, home prices are <a href="https://www.goldmansachs.com/insights/articles/us-house-prices-are-forecast-to-rise-more-than-4-percent-next-year" rel="noopener noreferrer" target="_blank">forecast</a> to rise—but at a much more moderate pace than the market has seen in recent years.</p>
<p><a href="https://wellsfargo.bluematrix.com/links2/html/e66acfd0-821a-4d6b-aa16-f1720de2f44a" rel="noopener noreferrer" target="_blank">Experts</a> are saying home prices will <a href="https://www.fanniemae.com/research-and-insights/surveys-indices/home-price-expectations-survey-hpes" rel="noopener noreferrer" target="_blank">grow</a> by an average of about 2.5% nationally in <a href="https://www.fanniemae.com/media/53226/display" rel="noopener noreferrer" target="_blank">2025</a> (<em>see graph below</em>):</p>
<p><a href="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20241017/20241021-2025-Home-Price-Forecasts-original.png" rel="noopener noreferrer" target="_blank"><img alt="a graph of green bars" decoding="async" src="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20241017/20241021-2025-Home-Price-Forecasts-original.png"/></a>This is far more manageable than the rapid price increases of previous years, which saw double-digit percentage growth in some markets.</p>
<p>What’s behind this <a href="https://www.simplifyingthemarket.com/2024/09/11/the-real-story-behind-whats-happening-with-home-prices/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">ongoing increase</a> in prices? Again, it has to do with demand. As more buyers return to the market, demand will rise – but so will supply as sellers feel less rate-locked.</p>
<p>More buyers in markets with inventory that’s still below the norm will put upward pressure on prices. But with more homes likely to be listed, supply will help keep price growth in check. This means that while prices will rise, they’ll do so at a healthier, more sustainable pace.</p>
<p>Of course, these national trends may not reflect exactly what’s happening in your local market. Some areas might see faster price growth, while others could see slower gains. As Lance Lambert, Co-Founder of ResiClub, <a href="https://www.resiclubanalytics.com/p/early-predictions-national-home-prices-2025-according-8-major-research-groups" rel="noopener noreferrer" target="_blank">says</a>:</p>
<blockquote><p><em>“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. That has been, after all, the case this year.”</em></p></blockquote>
<p>Even the few markets that may see flat or slightly lower prices in 2025 have had so much appreciation in recent years – it may not have a big impact. That’s why it’s important to work with a local real estate expert who can give you a clear picture of what’s happening where you’re looking to buy or sell.</p>
<h3>Bottom Line</h3>
<p>With mortgage rates expected to ease and home prices projected to rise at a more moderate pace, 2025 is shaping up to be a more promising year for both buyers and sellers.</p>
<p>If you have any questions about how these trends might impact your plans, connect with a local agent. That way you’ve got someone to help you navigate the market and make the most of the opportunities ahead.</p>
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