You’ve probably already noticed some changes this year if you’ve been keeping an eye on the market. What comes next, though? Here are the most recent expert predictions for the remainder of 2025, including changes in mortgage rates and home prices, and what these changes might entail for you.
Will Home Prices Fall?
A lot of purchasers are hoping that house prices will drop soon. Additionally, some people think that a larger drop is imminent because of recent headlines about prices declining in some places. Here are the facts, however.
Even though the growth of home prices is slowing, a crash is still possible. As explained by NAHB:
A decrease in demand and an increase in supply contributed to the slowdown in the growth of house prices. Increased inventory and persistently high mortgage rates worked together to reduce the upward pressure on home prices. These indicators pointed to a cooling market after years of sharp increases.
However, experts predict that prices will still increase nationally this year despite that slowdown. Prices are predicted to increase by 1.5–2% in 2025, according to the average of eight top forecasters (see graph below):
Accordingly, experts concur that a significant drop is simply not likely to occur if you’re waiting for one.
Remember that although prices are already declining slightly in some markets, the average decline is only -3.5%. That is very different from the market’s nearly 20% drop during the 2008 crash.
Plus, given how much home prices have increased in recent years, those minor adjustments are easily absorbed. According to data from the Federal Housing Finance Agency (FHFA), prices have increased by 55% nationwide in just the last five years.
The lesson learned? There is no crash in prices. They should continue to climb, albeit more slowly now. Additionally, some might contend that by the end of this year, they will be closer to flat. Again, though, there will be some local fluctuations and this will differ by market. Therefore, to see the most recent price trends in your area, rely on an expert.
Will Mortgage Rates Come Down?
Today’s buyers also frequently think, “I’m just going to wait for rates to come down.” But is that a wise move? As stated by Yahoo Finance:
“You’ll probably have to wait until 2025 if you’re hoping for a significant interest rate decrease. Current Federal Reserve news and other important economic data suggest that mortgage rates will remain stable and comparable to current levels.
Put differently, don’t wait for a drop that might not occur or attempt to time the market. The majority of experts predict that rates will stay in the sixes, and by the end of this year, they should be in the mid-6% range (see chart below):
And compared to their current situation, that isn’t a significant change. Therefore, if you need to move, let’s discuss how to do so and what to look out for. Because even though rates might not be as low as you would like, you don’t want to put off your needs in the hopes of something that the data indicates is unlikely to occur.
This year, it will be crucial to work with a specialist who is monitoring all the economic variables that can affect mortgage rates. This is because future rate movements may be impacted by shifts in factors like inflation and other important drivers.
The Takeaway for Buyers and Sellers
This market demands strategy, not hunches, whether you’re buying, selling, or considering doing both. The larger picture is one of moderation rather than a meltdown because prices are still rising nationally, albeit more slowly, and rates are expected to remain largely unchanged.
Bottom Line
Your best option if you want to move is to work with a real estate expert who understands how to handle the changing circumstances in your local market and concentrate on your unique circumstances rather than what the headlines say.