If you're curious about the real estate landscape in 2025, expert predictions offer positive news, particularly around mortgage rates and home prices. Whether you're gearing up to buy, considering selling, or simply watching market trends, here’s a deeper look at what experts forecast and how these factors might impact your next move.

Mortgage Rates Expected to Decline

One of the key factors influencing market activity is mortgage rates, and the outlook is optimistic. While rates have climbed in recent years, projections indicate a gradual decline in 2025 (see graph below):

Although this trend won’t be a straight descent, experts anticipate that the overall direction will be downward, with rates gradually easing as the year progresses. Rates will respond to new economic data and inflation adjustments, causing occasional fluctuations. However, focusing on the broader trend rather than day-to-day changes can provide valuable perspective.

As mortgage rates decline, affordability improves—your monthly mortgage costs go down, allowing you to consider a broader range of options. With lower financing costs, buyer interest may increase, creating a more active market. Charlie Dougherty, Director and Senior Economist at Wells Fargo, notes, “Lower financing costs will likely boost demand by pulling affordability-crunched buyers off of the sidelines.” As demand increases, both buyer competition and housing inventory are likely to rise. By staying connected with your agent, you can better understand how these rate shifts affect local demand.

Home Prices Likely to See Steady, Moderate Growth

While mortgage rates are expected to decline, home prices are forecast to experience more gradual growth than in recent years. Experts anticipate a modest national increase of about 2.5% in 2025 (see graph below):

This rate is more manageable than the rapid, double-digit price hikes seen previously. The anticipated steady growth reflects balanced demand and supply, as more sellers enter the market due to lessened rate constraints. A rise in inventory is likely to temper price increases, helping keep growth steady.

Demand will still play a role in this price trajectory. A gradual price rise is expected as buyers return to the market, while an increasing number of sellers provide more housing options. Despite slight regional variations, the overall pace of growth appears sustainable. As Lance Lambert, Co-Founder of ResiClub, explains, “Even if the average national home price forecast for 2025 is correct, 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.”

If you're considering buying or selling, working with a local expert who understands your area’s specific trends will be crucial, as they can help you navigate varying price dynamics.

Bottom Line

With mortgage rates projected to decline and home prices expected to grow at a slower pace, 2025 could bring promising opportunities for buyers and sellers alike. If you have questions about how these trends might shape your plans, let’s connect to discuss your options and help you make the most of the evolving market.