Stable mortgage rates, an increase in housing inventory and modestly increasing home prices are among the things we can expect to see from real estate in 2025.
This is according to local and national housing experts who have been forecasting what the new year may bring. And while there aren’t expected to be any drastic changes to the market, homebuyers could feel more confidence navigating the market.
Going into the new year, though, it is recommended that buyers get into the market if they can afford it rather than waiting it out. Rob Norman, eastern region president of Coldwell Banker Realty, based in New Jersey, said that regardless of what’s to come, buyers should get into the market as soon as they can to benefit from home appreciation.
“Don’t wait. History has not fared well for those who waited. Buy a home and get into the home so that as home prices appreciate, you reap the benefits of the appreciation,” he said. “Get in, find a home that fits everything you want and buy it. It’s been traditionally a great investment for a lot of people.”
Here’s what experts say we can expect from the real estate market in 2025.
The Federal Reserve announced three consecutive rate cuts this fall, bringing its 23-year high benchmark rate of 5.25% to 5.50% down to the range of 4.25% to 4.50%. These rate cuts were made in an attempt to provide much-needed relief for consumers, notably in terms of mortgage rates for home purchases.
Throughout 2024, 30-year fixed mortgage rates have ranged from 6% to mid 7%. And while borrowers could see a slight decrease in rates in 2025 as a result of these cuts, real estate experts believe that they’ll likely remain the same in the new year.
“There could be a slight decrease, but it’s going to be a volatile year, much like what we’ve seen this year,” said Bankrate Chief Financial Analyst Greg McBride. “Mortgage rates spent half of this year above 7%. I wouldn’t necessarily forecast an exact repeat of that in 2025, but the point is they’re going to be volatile. So I expect we’ll see mortgage rates potentially touching 7% again but then also getting down below the 6% mark slightly.”
In its 2025 Housing Forecast, Realtor.com is predicting an average rate of 6.3% for a 30-year fixed mortgage. Other housing forecasts from experts at Zillow and the National Association of Realtors aren’t predicting specific rates, but said they do expert that mortgage rates will continue to fluctuate the way they have been in 2024 in the new year.
“One of the things I never like to try to guess is mortgage rates. We don’t control that,” Norman said. “And while interest rates are a driving force in the market, they don’t determine everything. So I don’t want to venture a guess as to what’s going to happen.”
For those hoping to see more inventory hit the market in the new year, many housing experts are predicting to see an increase in the number of properties for sale in 2025.
Realtor.com predicted in its 2025 Housing Forecast that there will be an 11.7% increase in existing home for-sale inventory in the new year. Similarly, the National Association of Realtors said it is expecting a 9% increase in existing home for-sale inventory and an 11% increase in new home for-sale inventory.
Norman said he agrees that inventory will likely increase, at least a little bit, in 2025. This is because there are always driving factors that require people to move, and he said he believes that many homeowners who have lower interest rates and have been sitting on the sidelines will start to reenter the market in the new year.
“I don’t think we’re going to see a flood of inventory coming on, but I do see the inventory coming up to a healthy rate,” Norman said.
McBride echoed this sentiment, but said he believes this increase in inventory will come from homes taking longer to sell, rather than from an influx of new homes hitting the market.
Homebuyers in 2024 had to grapple with consistently increasing home prices, and that’s unlikely to change in 2025. But depending on how much inventory is available on the market in the new year, the rate at which they increase could be slower.
“We think the downward pressure on price growth due to this supply-side effect will slightly win out over the upward pressure on price growth due to falling mortgage rates next year (at least compared with the relative balance this year),” Realtor.com’s 2025 Housing Forecast reads.
Assuming housing inventory increases in the new year, Realtor.com predicts that home prices will rise by 3.7% in 2025 and the National Association of Realtors believes there will be a 2% increase.
McBride said he also believes that home prices will increase at a more modest pace in the new year. Overall, he said that homes can only sell for the price that consumers are able to pay. And because all of the costs associated with homeownership are increasing, home prices can only increase so quickly.
“I do believe that, traditionally, real estate has been one of the best investments you could have,” Norman said. “So if real estate is going to be something you’re going to be investing in or living in long term, it’s always safe to assume prices will go up.”
Maddie McGay is the real estate reporter for NorthJersey.com and The Record, covering all things worth celebrating about living in North Jersey. Find her on Instagram @maddiemcgay, on X @maddiemcgayy, and sign up for her North Jersey Living newsletter. Do you have a tip, trend or terrific house she should know about? Email her at MMcGay@gannett.com.
This article originally appeared on NorthJersey.com: NJ housing market predictions for 2025: What to expect in the new year
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