What to Expect: Expert Forecasts for the 2025 Housing Market

As we step into 2025, many are asking: What will the housing market look like this year? Whether you’re buying, selling, or simply curious, understanding the trends shaping the market is key to making informed decisions. Here's what experts are saying about the two biggest factors in the market today: mortgage rates and home prices.

Will Mortgage Rates Come Down?

All eyes are on mortgage rates this year. While we’re unlikely to see a return to the historically low rates of 3-4%, there’s good news: experts forecast a gradual decline into the mid-to-low 6% range by the end of 2025.

The table below provides the latest projections for the 30-year fixed mortgage rate from Fannie Mae, MBA, and Wells Fargo. The average forecast shows a steady decline throughout the year:

As 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%."

While these projections offer a promising outlook, it’s important to remember that forecasts are based on current economic conditions. Factors like inflation and other economic drivers can influence rates, so some fluctuations are likely. A trusted lender and real estate professional can help you stay updated and strategize accordingly.

What About Home Prices?

Unlike mortgage rates, home prices are expected to keep climbing, though at a more moderate and sustainable pace. Experts forecast an average increase of around 3% in 2025. This is a much healthier growth rate compared to the steep increases of recent years, offering buyers more stability in the market.

The primary driver behind this growth remains the classic supply-and-demand dynamic. While housing inventory has increased slightly from last year, it’s still not enough to meet buyer demand. As Redfin notes:

"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."

Key Takeaways for Buyers and Sellers

For Buyers: Even a small decline in mortgage rates can make a significant difference in your monthly payment. Waiting for the "perfect" rate or timing may cause you to miss out on homes that continue to appreciate in value.

For Sellers: With more homes expected to hit the market this year, strategic pricing and preparation are essential to attract buyers in a slightly more competitive market.

Bottom Line

The 2025 housing market presents opportunities and challenges for buyers, sellers, and investors alike. With mortgage rates expected to ease and home prices rising at a more sustainable pace, staying informed and working with experienced professionals will be crucial to achieving your real estate goals.

Have questions about how these trends affect your plans? Reach out today for personalized advice and expert insights to help you navigate the year ahead!

San Mateo County Rolling 3-Month Data

Below, our data is based on averages for Single-family homes in San Mateo County over the last 90 days (October to December 2024). This data was gathered on January 3, 2025. 

San Mateo County Market Report

Thinking of selling? 

I'd love to discuss your home's value and positioning in the current market. Call or text Kevin at 415.283.7919 or email Kevin at Kevin@PickettRealEstateGroup.com