Housing Market 2025: Prices Continue to Rise, Mortgage Rates Remain High

Scott Holt has four good reasons to be shopping for a home. 'We have three kids,' who are all age six and under, 'We got a fourth on the way,' he said.Holt works from home, so in addition to needing more space, he also needs a dedicated office. He said his family's rented townhouse in Washington D.C. works for now, but that won't last forever.'Our kids are only gonna get bigger,' Holt said.Holt's family has been casually searching for a home to buy in the D.C. area.

But costs have only gone up, holding them back from home ownership.'We just are kind of settling in on the fact that it's probably not gonna go down,' Holt said, 'and that rates may not go down enough.'Housing predictions in 2025Perspective buyers like Holt will continue to face these tough realities in the new year.The housing market in 2024 was the slowest in decades as buyers faced higher prices. Now the 2025 housing forecast from Realtor.com calls for home prices to grow even more, by 3.7%, a continuing trend since 2012.Still, Zillow senior economist Orphe Divounguy points out, that is a much-needed slowdown compared to price growth the last two years.'The rapid price increases that we saw during the pandemic were simply unsustainable, right?' Divounguy said. 'We're starting to see price growth easing, incomes are growing, catching up.'Falling but still-high mortgage ratesIn its forecast, Realtor.com predicts mortgage rates will start the new year at 6.3%, only dropping to 6.2% at the end of 2025.'There is no magic 2% drop coming,' said Leo Pareja, CEO of eXp Realty. 'I think there's a pretty big misconception that is good to clear up -- is that when the Fed drops the rate, there's an immediate mortgage rate drop'

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