2025 Housing Market Forecasts: What To Expect

Looking ahead to 2025, it's important to know what experts are projecting for the housing market. And whether you're thinking of buying or selling a home next year, having a clear picture of what they’re calling for can help you make the best possible decision for your homeownership plans.

Here’s an early look at the most recent projections on mortgage rates, home sales, and prices for 2025.

Mortgage Rates Are Expected To Gradually Decline

Mortgage rates play a significant role in the housing market. The forecasts for 2025 from Fannie Mae, the Mortgage Bankers Association (MBA), the National Association of Realtors (NAR), and Wells Fargo show an expected gradual decline in mortgage rates over the course of the next year (see chart below):

This expected decrease is tied to a continued reduction in inflation and a mild increase in unemployment rates, signaling a strong but decelerating economy. The Federal Reserve is likely to lower the Federal Funds Rate, which typically leads to lower mortgage rates. As Morgan Stanley says:

“With the U.S. Federal Reserve widely expected to begin cutting its benchmark interest rate in 2024, mortgage rates could drop as well—at least slightly.”

Increase in Home Sales Expected

The market will see an increase in both the supply of available homes on the market, as well as a rise in demand, as more buyers and sellers who have been sitting on the sidelines because of higher rates choose to make a move. That’s one big reason why experts are projecting an increase in home sales next year.

According to Fannie Mae, MBA, and NAR, total home sales are forecast to climb slightly, with an average of about 5.4 million homes expected to sell in 2025 (see graph below):

This marks an improvement from the sales figures of 2023 and 2024, where approximately 4.8 million homes were sold in 2023, and around 4.5 million homes are expected to sell in 2024. While the decline in mortgage rates may not cause a surge in market activity, it will likely encourage more buyers and sellers to make their move, leading to increased competition for available homes.

Moderate Increase in Home Prices

With more buyers entering the market, home prices are expected to experience moderate growth in 2025. According to 10 of the most trusted sources in real estate, the average national home price is forecast to rise by about 2.6% next year. (see graph below):

But as you can see, there’s a range of opinions on how much prices will climb. Experts agree, however, that home prices will continue to increase moderately next year at a slower, more normal rate. But keep in mind, prices will always vary by local market.

Bottom Line

Being aware of 2025 housing market forecasts is vital for planning your next move in Iowa real estate. Whether you're considering buying or selling, staying informed about trends in mortgage rates, home sales, and prices will help you make the best decision possible. Let's connect to discuss how these forecasts could impact your real estate plans in Iowa.

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