Stable mortgage rates, an increase in housing inventory and slightly rising house prices are some of the things we can expect from real estate in 2025.
So say local and national housing experts who have predicted what the new year will bring. And while there aren’t expected to be drastic changes in the market, homebuyers could feel more confident navigating the market.
However, as we enter the new year, it is recommended that buyers enter the market when they can afford it, rather than waiting. Rob Norman, president of the eastern region of New Jersey-based Coldwell Banker Realty, said that no matter what happens, buyers should get into the market as soon as possible to take advantage of their homes’ appreciation.
‘Don’t wait. History has not been kind to those who waited. Buy a house and get into the house so that as house prices rise, you can reap the rewards of appreciation,” he said. “Get in, find a house that ticks all the boxes you want and buy it. It’s traditionally been 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 interest rate cuts this fall, bringing the 23-year high rate from 5.25% to 5.50% to a range of 4.25% to 4.50%. These interest rate cuts have been implemented in an effort to provide much-needed relief to consumers, especially in the area of mortgage rates for home purchases.
Through 2024, 30-year mortgage rates ranged from 6% to the mid-7% range. And while borrowers could see a slight drop in interest rates in 2025 as a result of these cuts, real estate experts believe these rates will likely remain the same in the new year.
“There may be a slight decline, but it will be a volatile year, similar to what we’ve seen this year,” said Greg McBride, Bankrate’s chief financial analyst. “The mortgage interest rate was above 7% for half of this year. I don’t necessarily expect an exact repeat of that in 2025, but the point is that they will be volatile. So I expect mortgage rates to potentially reach 7%. % again, but slightly below 6%.’
In its 2025 Housing Forecast, Realtor.com predicts 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 don’t predict specific rates, but do say mortgage rates will continue to fluctuate in the new year as they were in 2024.
“One of the things I never like to try to guess is mortgage rates. We have no control over 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 guess what’s going to happen.”
For those hoping to see more inventory hit the market in the new year, many housing experts predict the number of homes for sale will increase by 2025.
Realtor.com predicted in its 2025 housing forecast that there will be an 11.7% increase in existing housing stock in the new year. Similarly, the National Association of Realtors said it expects a 9% increase in existing home inventory and an 11% increase in new home inventory.
Norman said he agrees that inventory will likely increase, at least a little, in 2025. This is because there are always driving factors that push people to move, and he said he believes many homeowners with lower interest rates and on the sidelines will come back into the market in the new year.
“I don’t think we’ll see a flood of inventory coming, but I do see inventory reaching healthy levels,” Norman said.
McBride echoed this sentiment, but said he believes this increase in inventory will come from homes taking longer to sell, rather than an influx of new homes coming onto the market.
Homebuyers faced continuously rising home prices in 2024, and this is unlikely to change in 2025. But depending on how much inventory is available in the market in the new year, the pace at which these rise could be slower.
“We believe the downward pressure on price growth from this supply-side effect will somewhat outweigh the upward pressure on price growth from falling mortgage rates next year (at least compared to the relative balance this year),” Realtor said .com. Housing forecast 2025 reads.
Assuming housing inventory increases in the new year, Realtor.com predicts home prices will rise 3.7% in 2025 and the National Association of Realtors believes there will be a 2% increase.
McBride said he also believes home prices will rise at a more modest pace in the new year. Overall, he said homes can only be sold for the price consumers can afford. And because all the costs associated with homeownership are rising, home prices can only rise so fast.
“I really believe that real estate is traditionally one of the best investments you can have,” Norman said. “So if real estate is something you’re going to invest in or live in long-term, it’s always safe to assume that prices will rise.”
Maddie McGay is the real estate reporter for NorthJersey.com and The Record, discussing all the things worth celebrating about life in North Jersey. Find her Instagram @maddiemcgay, on X @maddiemcgayyand sign up for her Living in North Jersey newsletter. Do you have a tip, trend or great 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
