The prospect of homeownership has felt increasingly out of reach in the last few years. Prospective buyers face multiple obstacles: soaring mortgage rates, stubbornly high home prices and a scarcity of available homes for sale. Will 2025 finally bring some relief?
Housing affordability isn’t likely to improve dramatically this year, but there are reasons to be hopeful. Though every local market has different challenges, experts predict slight improvements in inventory levels and home prices.
“Overall, buyers can expect a competitive market, but one that offers slightly more opportunities than in recent years,” said Jeb Smith, licensed real estate agent and member of CNET Money’s expert review board
That said, the next several months are full of uncertainty. The Trump administration’s economic policies will affect the Federal Reserve’s monetary decisions, mortgage rates, construction prices, real estate development and homebuyer sentiment.
We talked with several experts about their housing market predictions and how homebuyers should prepare. Here’s what they had to say.
1. Follow what housing market experts are saying
Real estate trends are dynamic and often hard to understand, especially when tracking mortgage movement. That’s why housing market experts and economists always review macroeconomic data to better understand where things are headed.
To become a more informed buyer, keep an eye on what market watchers are saying by reading newsletters or listening to podcasts. Here are some of the experts I follow and podcasts I listen to that help me stay in the loop.
2. Watch mortgage rate trends
While mortgage rates are volatile and fluctuate daily, experts aren’t anticipating any dramatic dips in borrowing costs this year. Since inflation is likely to stay elevated, the central bank is projecting fewer interest rate cuts, which puts upward pressure on the mortgage market.
Most forecasts call for average 30-year fixed mortgage rates to hold above 6.5% for the first half of 2025 and inch down toward 6% by year-end.
Average interest rates reflect what lenders advertise, but there are ways to get lower individual rates on a home loan. Look for different loan terms, negotiate with your broker or try other options, like purchasing mortgage points and buying down your rate.
“While rates are unlikely to return to the record lows of the past, even moderate reductions can help make monthly payments more manageable for buyers,” Smith said.
Securing a lower rate from the beginning, even if by a few tenths of a percentage point, can also save you tens of thousands of dollars in interest over the course of the loan.
