2025 Housing Market Outlook: What To Expect

As we look ahead to 2025, it’s important to stay informed about what housing experts are forecasting for the year. Whether you’re thinking of buying or selling a home in the near future, understanding these projections can help you make the best decision for your homeownership plans.

Let's dive into the key housing market predictions for mortgage rates, home sales, and prices in 2025.

Mortgage Rates Are Expected to Decrease Slightly

Mortgage rates are a key factor in the real estate market, and forecasts for 2025 suggest a gradual decline over the next year. Leading organizations like Fannie Mae, the Mortgage Bankers Association (MBA), the National Association of Realtors (NAR), and Wells Fargo are all projecting a slight dip in rates.

Why the drop? Economic trends—such as easing inflation and a slight rise in unemployment—point to a slowing yet resilient economy. These signs may prompt the Federal Reserve to lower the Federal Funds Rate, which typically results in lower mortgage rates. As Morgan Stanley explains:

“With the U.S. Federal Reserve widely expected to begin cutting its benchmark interest rate in 2024, mortgage rates could drop slightly in 2025.”

This anticipated decrease in mortgage rates could make home buying more affordable for many prospective buyers.

More Homes Are Expected to Sell

With more buyers entering the market due to slightly lower mortgage rates, we can also expect an increase in home sales. In addition, many homeowners who have been holding off due to higher rates will likely decide to sell, contributing to a boost in the supply of homes for sale.

Experts predict that total home sales will rise modestly next year. Fannie Mae, MBA, and NAR all forecast about 5.4 million homes to be sold in 2025—up from approximately 4.8 million in 2023 and 4.5 million in 2024. This increase represents a healthy, yet manageable, recovery in home sales after a couple of slower years.

While a significant surge in sales isn’t expected, more homes on the market means more opportunities for both buyers and sellers. For those looking to buy, competition may be stronger as demand increases. For sellers, this could be a great time to capitalize on a market with more buyers ready to make a move.

Home Prices to Rise Moderately

With an uptick in both supply and demand, home prices are projected to rise—though at a slower, more sustainable pace. On average, real estate experts are forecasting a 2.6% increase in home prices nationwide in 2025. However, it’s important to note that price trends will vary depending on local markets.

Despite the projected price increases, experts agree that the market will see more moderate price growth compared to the double-digit jumps of previous years. For buyers, this means prices will continue to rise, but at a more manageable rate. Sellers can expect steady demand, especially if they’re in a desirable area.

Bottom Line

Understanding 2025 housing market forecasts can help you plan your next move. Whether you're buying or selling, staying informed about these trends will ensure you make the best decision possible. Connect with a Real Michigan Life agent to discuss how these forecasts could impact your plans.