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By Nick Berard

Nick Berard is a world-class Realtor with a passion for helping clients manage wealth through real estate.

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Right now, the No. 1 question I’m getting is, “What’s going to happen to the housing market in 2025?” I get it; a lot of people had plans to move in 2024 but put things on hold due to higher mortgage rates and a slowing market. This begs the question: Will 2025 be any different? The short answer is yes, although there probably won’t be a dramatic shakeup that flips the market on its head. Today, I’m going over what the top experts are forecasting for mortgage interest rates, home prices, and buyer demand in 2025. Plus, I’ll share my insights on how you can get ready for these changes before the new year even starts:

1. Mortgage rates will ease slightly. It’s no secret that higher mortgage interest rates have hurt affordability for buyers and caused our market to slow down. U.S. existing home sales hit a 14-year low in September 2024, and one of the biggest reasons why is that would-be buyers are sitting on the sidelines waiting for rates to drop. While Fannie Mae and Freddie Mac aren’t predicting rates to crash to where they were a few years ago,most experts believe rates will fall below the 6% mark for the first time since Q2 of 2022. Since mortgage rates are a key factor in housing affordability, this is fantastic news for buyers sitting on the fence.

2. Home prices will increase slightly. While home prices have stagnated recently or even come down in some areas of the country, prices are projected to rise in 2025. A recent survey of 15 financial institutions shows that while some predict a small decrease, most forecast an average increase between 2.6% and 3.5%. This means homeowners can expect stability, but waiting for lower interest rates may lead to missed opportunities as prices begin to rise.

“Buyers need to take advantage of this window before it’s too late.”

3. More buyers will enter the market. Lower interest rates and steady prices mean demand for homes will increase. According to the Senior Economist at Wells Fargo, “Lower financing costs will likely boost demand by pulling affordability-crunched buyers off of the sidelines.” As these buyers enter the market, the pace will speed up. Homes will sell faster, competition will increase, and supply will decrease as more buyers fight over fewer options. New construction will also play a role, with additional homes expected to enter the market.

4. Lock in effect. With the lock-in effect, sellers with really low interest rates might decide to sell as they see the value in their equity. In my local market, nearly 32%, nearly one-third of listings sell within the first week, although overall average days on market are going up. This indicates opportunities for buyers and sellers alike.

If you’re considering buying or selling in 2025, now is the time to start planning to get ahead of the curve. Buyers need to take advantage of this window to make a move before it’s too late. Whether you’re looking to sell or buy, please call or email me. I’d love to help you plan your next move!

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