In our 2025 mortgage forecast, experts outlined a rough range between 5% and 7% for the average 30-year fixed mortgage. Most housing market forecasts predict rates landing around 6.4% at the end of the year. Lower mortgage rates alone won't fix today's housing affordability crisis.
Home prices are expected to go up throughout 2025 at a rate of 3.7%. “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 to the relative balance this year),” says Hale.
Experts overwhelmingly say that the housing market isn't going to crash anytime soon. The last housing crash helped cause today's lack of supply, which is what's keeping prices from falling. Mortgage rates, however, are expected to ease in 2025. This will help make homeownership more affordable.
The Mortgage Bankers Association predicts in its Mortgage Finance Forecast that mortgage rates will gradually slide from 6.6% at the beginning of 2025 to 6.3% throughout 2026.
We forecast existing home sales to total 4.25 million in 2025, an improvement of 4.8 percent compared to our expected 2024 sales pace of 4.06 million, but still down 20.3 percent compared to 2019.
Average personal loan rates started at 11.93% in 2024. Rates were relatively unchanged for most of 2024, ending the year at 12.29%. Personal loan rates may be headed lower in 2025, but you'll need good credit to snag the best rates.
As of today, the markets are currently forecasting just one rate cut in 2025 (www.cmegroup.com). U.S. 10-year Treasury Bond yields remain in the range bound between 4.0% and 5.0%. S&P 500 earnings fail to increase the consensus rate of 14% in 2025 but all 11 S&P 500 sectors post positive EPS growth.
Housing Market Forecast 2026: Will Prices Rise or Fall
In 2026, the housing market is expected to continue its upward trend, with home prices rising at a moderate pace. The pent-up demand for housing is expected to be supplied between 2025 and 2030, according to the National Association of Home Builders.
A sharp decline in home values is one of the most immediate consequences of a housing market crash. For homeowners, this means that the equity they've built up over time can quickly erode. This decline can leave homeowners in a precarious financial position, particularly those who bought at the peak of the market.
KEY TAKEAWAYS. Homeowners have benefited from increased home values over the past few years, but prices are expected to grow slower in 2025 than in previous years. Economists said as mortgage rates fall and homeowners experience life-changing events, more will list their homes.
What are rent prices expected to do next? "At a national level, the median asking rent price in the U.S. will likely stay flat over the course of a year in 2025, as new rental inventory becomes available," said NBC News, citing Redfin.
“If we bring more supply to the housing market, home price increases will not be as outrageous … and will be more in line with wages.” Yun's forecast: 2025 median home price: $410,700; up 2% over 2024. 2026 median home price: $420,000, up 2% over 2025.
Lawrence Yun, chief economist at the National Association of Realtors, even told CNBC in 2023 that he doesn't think mortgage rates will reach the 3% range again in his lifetime.
The 30-year mortgage averaged 6.68% in 2024, down from 6.91% in 2023.
To qualify for an FHA loan in California borrowers need to have a minimum mortgage specific credit score of 580. A credit score of 580 can qualify you for a 3.5% down payment.
Home prices keep rising despite the fact that buyers are pulling back from the market because inventory is low, Ed Pinto, a senior fellow at the right-leaning American Enterprise Institute, told MarketWatch. Prices are expected to grow 5.5% in 2025, as compared to this year, according to the AEI's forecast, Pinto said.
If your credit score is strong, your employment is stable and you have enough savings to cover a down payment and closing costs, buying now can still be a smart move. But if your personal finances are not ideal at the moment, or if home values in your area are on the decline, it might be better to wait.
Expert Projections of Interest Rates in the Next Few Years
Louis Fed, interest rates in the coming years are expected to be: 2025: 3.4% 2026: 2.9% 2027: 2.9% (according to Federal Reserve Bank members and presidents, the median projection for rates after 2026 is 2.8% with a range of 2.4% to 4.9%)
Key takeaways. We forecast global growth in 2025 to expand at a modest 2.5% pace. Developed economies will grow more slowly, below 2%. Emerging economies will grow more quickly, helping drive global growth.
Despite an overall reduction in borrowing costs over the past two years, the 30-year mortgage rate recently moved up from a little above 6% in September 2024 to closer to 7% in January 2025. That contrasts with longer term mortgage rates holding at historically low levels of between 2% and 3% for much of 2020 and 2021.
Fannie Mae's chief economist says, “Long-run interest rates have moved upward over the past couple of months following a string of continued strong economic data and disappointing inflation readings.” They are putting the average 30-year fixed rate at 6.5% in the beginning of 2025, declining to 6.1% in 2026.
Falling interest rates expected to drive recovery in the second half of 2025, says CIBC's chief economist.