The housing market in 2024 has been marked by high mortgage rates and soaring prices, making it challenging for buyers to enter the market. Experts predict that 2025 will bring more of the same, with prices rising at a slower pace due to falling interest rates.
Currently, the average rate for a 30-year fixed mortgage stands at 6.85%, according to FreddieMac data. While this is slightly lower than earlier in the year, experts say it may not be enough to ease demand and push down prices. In fact, Fed Chair Jerome Powell has indicated that rate cuts may slow over the course of 2025, leaving mortgage rates higher for longer.
Redfin forecasts average 30-year fixed mortgage rates to remain in the high 6% range, while Zillow predicts a moderate decrease in mortgage rates. However, experts warn that even with lower interest rates, prices will continue to rise due to supply and demand imbalances.
The lack of new homes being built has kept prices soaring, despite efforts by homebuilders to increase production. Current homeowners are reluctant to swap out their current mortgage rates for higher ones, further exacerbating the issue. Experts predict a continued rise in home prices, albeit at a slower pace.
However, there is a glimmer of hope: faster-than-expected progress in bringing inflation down could lead to lower interest rates and a subsequent easing of mortgage rates. Conversely, an economic downturn could lead to a drop in home prices.
Overall, experts are predicting a gloomy outlook for the 2025 housing market, with high mortgage rates and rising prices expected to continue. The only possible exception is if inflation proves more stubborn than expected, leading to lower interest rates and a brighter outlook.
Source: https://abcnews.go.com/Business/will-2025-be-better-year-buy-house/story?id=117195545