Mortgage rates, home prices and buyer demand all impact the market, let’s take a look at where they stand now, to give you and idea of the big picture.
Mortgage rates: expected to decline slowly
Note: As of February 13, 2025, the average 30-year fixed mortgage rate in the United States is approximately 6.87%.
Fannie Mae: Anticipates the 30-year fixed mortgage rate to decrease to 6.5% by the first quarter of 2026. Source: money.usnews.com
Mortgage Bankers Association (MBA): Forecasts a gradual decline to 6.4% throughout 2026. Source: money.usnews.com
National Association of Home Builders (NAHB): Expects the 30-year mortgage rate to decrease to around 6.5% by mid-2025 and fall below 6% by the end of 2026. Source: money.usnews.com
Realtor.com: Projects the 30-year mortgage rate to average 6.3%, ending the year at 6.2%. Source: realtor.com
TD Economics: Predicts the average 30-year mortgage rate will drop to 5.8% by the end of 2025. Source: apnews.com
Why this matters: When mortgage rates drop, monthly payments decrease, making homeownership more affordable. Lower rates can also allow buyers to afford more expensive homes, often leading to increased demand for both entry-level and move-up homes.
Housing inventory levels: Still tight but improving
At the end of 2024, housing inventory was at a 4.2-month supply. For the buyer/seller market to be balanced the market needs a 5 to 6-month supply.
Here’s how “months of supply” is calculated: Active Listings / Homes Sold per Month = Months of Supply
For example: If there are 1,000 homes for sale and 250 homes are sold per month, the supply would be:1,000 / 250 = 4
This means it would take about
4 months to sell all the homes currently available for sale, assuming the sales pace stays the same.
Why this matters:
When inventory is low, there are fewer homes for buyers to choose from, which can create competition, drive prices higher and give sellers more negotiating power.
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Home prices: will experience modest growth
In 2024, prices rose by 4.5%. Looking ahead, the National Association of Realtors (NAR) predicts a more modest increase of about 2%.Looking ahead, the National Association of Realtors (NAR) predicts a more modest increase of about 2%.
National Association of Realtors (NAR): Projects a 2% increase in the median home price for 2025. Zillow: Forecasts a 2.6% growth in home values for 2025 HousingWire: Anticipates a 3.5% increase in home prices in 2025
Why this matters:This means that while home values are still increasing, the gains of recent years are slowing. Accurate pricing and understanding the local market will be essential to attracting buyers in 2025. Working with a real estate agent who can help navigate the market and position your home competitively, is essential. Reach out any time, I’m at your service – LoveSouthJersey@gmail.com
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