Buying a House in 2025? Here’s What You Need to Know | Global News Avenue

While rising home prices and mortgage rates have kept many people out of the market over the past few years, homebuyers can look forward to having even more options in the new year.

Buyers may get more breathing room in 2025 as mortgage rates drop slightly, more homes are listed for sale and prices grow at a slower pace than in past years. If you’re looking for a new home, here’s what you need to know.

Mortgage rates could fall, but not by much

After falling to ultra-low levels during the pandemic, mortgage rates have climbed back into the 6% to 7% range, helping to keep some would-be buyers out.

Potential buyers may get some breathing space, but economists say it won’t be much. Forecasters expect mortgage rates to stabilize at just over 6% next year.

this 10-Year Treasury Bond YieldOften seen as an indicator of how confident investors are about the future of the economy and inflation, it’s also likely to keep mortgage rates higher in 2025. Because most mortgages are government-backed or have government guarantees, mortgage rates generally follow the trajectory of yields, Yun said.

“Even if people take out a 30-year mortgage, they typically tend to pay off the mortgage within 10 years, (or they will) sell the home and buy a new home,” he said. “As a result, mortgage rates tend to track changes in the 10-year Treasury rate.”

Economists say yields are likely to remain high if inflation remains high. However, Yun expects yields to drop to 3.5% in the new year. The 10-year Treasury yield has been hovering around 4.5% since the Fed’s last meeting.

You can have more choices

With mortgage rates falling slightly next year, that could prompt more homeowners to sell.

Homeowners are hesitant to give up the ultra-low mortgage rates they secured during the pandemic. Goldman Sachs says 85% of mortgage borrowers have interest rates below current market rates. This has Target the real estate marketprices rise and inventories decrease.

Economists say many consumers are also facing life-changing events such as divorce, children, marriage or new jobs that will prompt them to list their current homes.

According to Realtor.com’s 2025 housing market forecast, the number of existing homes for sale is expected to grow 11.7% next year, with the housing market reaching balance for the first time in nine years.

Prices won’t rise quickly

This month’s supply is a key indicator of how many months it will take to sell all the homes currently for sale. Anything less than four months is considered a seller’s market. Supply is expected to improve from an average of 3.7 months in 2024 to 4.1 months in 2025.

If expectations for homes on the market come true, competition will decrease and prices may slow next year. According to Realtor.com, for-sale inventory heading into the new year will be the highest since December 2019, and 20% of listings will see price reductions.

“Considering how high the barriers to affordability are, it’s surprising how competitive home ownership will be in 2024,” Zillow chief economist Skylar Olsen said in a statement. “2025 should be Free up more inventory and give buyers more breathing room.”