If you’ve been keeping an eye on the housing market this year, you’ve probably noticed a few changes already. But the bigger question on everyone’s mind is: what’s next? Will prices fall? Will mortgage rates finally drop? Or will the market keep moving forward at the same steady pace?
Here’s what the latest expert forecasts say about the rest of 2025, and what it could mean for your plans.
Will Home Prices Fall?
It’s no secret that many buyers are crossing their fingers for home prices to come down. Recent headlines about small dips in certain markets have added fuel to that hope. But the reality paints a different picture.
While price growth has slowed, that doesn’t equal a crash. The National Association of Home Builders (NAHB) explains:
“House price growth slowed . . . partly due to a decline in demand and an increase in supply. Persistent high mortgage rates and increased inventory combined to ease upward pressure on house prices. These factors signaled a cooling market, following rapid gains seen in previous years.”
In other words, prices aren’t skyrocketing the way they did in recent years, but they’re still on the rise overall.
- The average of 8 leading forecasters shows prices will increase 1.5% to 2% nationally in 2025.
- While some local markets have seen prices dip by about -3.5%, that’s nowhere near the dramatic 20% drop we saw during the 2008 crash.
- And don’t forget: according to the Federal Housing Finance Agency (FHFA), home prices are up 55% nationally compared to just five years ago.
The takeaway? Prices may level out in some areas, and a few markets may experience small declines, but a nationwide crash is not in the cards.
Will Mortgage Rates Come Down?
Many buyers are also waiting for mortgage rates to fall before they make a move. But is that the right approach? The short answer: probably not.
Yahoo Finance recently reported:
“If you’re looking for a substantial interest rate drop in 2025, you’ll likely be left waiting. The latest news from the Federal Reserve and other key economic data point toward steady mortgage rates on par with what we see today.”
That means rates are expected to hover in the mid-6% range by the end of 2025—not a significant change from where they are now.
So if you’re waiting for a massive drop to make your dream home more affordable, you may end up waiting too long. Instead, the smarter move is to focus on strategies that work with today’s numbers, whether that’s exploring different loan products, negotiating with sellers, or taking advantage of builder incentives.
And remember, mortgage rates are influenced by economic factors like inflation, job growth, and Federal Reserve policy. Having an expert in your corner who follows these shifts closely will give you an advantage as the year goes on.
What This Means for Buyers and Sellers
The housing market today isn’t defined by extremes—it’s defined by moderation.
- For buyers: Prices are still rising, just at a slower pace, and rates are holding steady. That means affordability is still a challenge, but it’s not worsening at the pace we saw a couple of years ago. Acting now could help you lock in before prices edge higher.
- For sellers: Home values are holding strong. While the pace of appreciation has cooled, equity gains are still significant compared to just a few years ago. That means you may have more flexibility than you realize if you’re considering selling.
The 2025 housing market isn’t heading for a meltdown, it’s moving into balance.
Prices are stabilizing, rates are steady, and buyers and sellers alike have opportunities if they approach the market with the right strategy.
Instead of waiting for the “perfect” conditions (which rarely arrive), the best approach is to focus on your personal situation and work with a trusted real estate professional who knows your local market inside and out.
Because at the end of the day, your life doesn’t run on market headlines, it runs on your needs, goals, and dreams.