2025 Housing Market Update: Impact of High Mortgage Rates on Prices and Sales

Looking ahead to 2025, most experts in the housing market are predicting that home prices will continue to rise. Even though mortgage rates are higher than expected, it seems that the level of available housing inventory has a bigger impact on prices. One standout forecast comes from Apollo’s Torsten Slok, who is bullish on housing prices, predicting a 10.8% increase.

It’s interesting to note that big banks and Wall Street are particularly optimistic about housing prices in 2025. This positivity may be linked to diminishing recession fears and the current trend towards a soft landing. Banks are also hopeful about lower mortgage rates next year, which could lead to increased sales and upward pressure on housing prices.

Freddie Mac recently highlighted inventory levels in their November report and suggested that a stronger economy is on the horizon for 2025. They presented a chart illustrating the rise in mortgage rates since September, indicating positive economic growth expectations.

Goldman Sachs is another key player in the predictions for 2025. They anticipate a tightening labor market, which could lead to higher wages and increased housing demand in the coming year. Additionally, expanding listing inventory could facilitate more home sales, further driving the housing market.

While the outlook for 2025 seems promising, it’s important to remember that the housing market can be complex, as discussed in articles like “Does NYC actually have a housing shortage, or just a lack of good inventory?” It’s difficult to predict exactly what the future holds, but many experts agree that the coming year could be a Goldilocks scenario – just right.

As we move closer to 2025, it will be fascinating to see how these forecasts play out and how factors like inventory levels, mortgage rates, and economic conditions shape the housing market in the coming year.