The housing market may become slightly more affordable in 2025, with economists forecasting that mortgage rates will fall but not by much. This could motivate more homeowners to list their houses for sale, increasing the number of available homes and reducing competition.
According to Goldman Sachs, 85% of mortgage borrowers currently have interest rates below current market rates, holding up the housing market and driving up prices. However, as mortgage rates stabilize slightly above 6% next year, some buyers may find more breathing room in the new year.
The 10-year Treasury bond yield, a key indicator of economic confidence, is expected to remain high due to sticky inflation. Nevertheless, economists predict that the yield will drop to as low as 3.5% in 2025. This decrease could lead to lower mortgage rates and increased options for buyers.
As the housing market is expected to become more balanced, with an 11.7% increase in existing homes for sale next year, competition is likely to decrease. The month’s supply of homes on the market is also expected to improve, from a 3.7-month average in 2024 to 4.1 months in 2025.
This could result in slower home price growth and even cuts to asking prices in some cases. Additionally, 20% of listings are expected to have price cuts in 2025, according to Realtor.com. Overall, while the housing market may not become dramatically more affordable, buyers can expect more options and reduced competition in 2025.
Source: https://www.investopedia.com/buying-a-house-in-2025-here-s-what-you-need-to-know-8748385