THIS INFORMATION BELOW IS A SNIPPET FROM AN ARTICLE PUBLISHED 8/2/2025 IN U.S. NEWS and written by Erika Giovanetti, the consumer lending analyst for U.S. News & World Report.
Mortgage rates are expected to stay elevated for the foreseeable future, which has implications for prospective homebuyers and sellers. But regardless of current mortgage rate trends, Americans will still have reasons to move, whether they want to downsize in retirement or need to relocate for a better job.
Here's what you should consider if you're planning on buying or selling a home in 2025.
What Buyers Should Know: Waiting for Lower Rates Comes at a Price
Good things may come to those who wait, but patience doesn't always pay off in the housing market. Four in five homebuyers are waiting for mortgage rates to fall this year before buying a home, according to a March 2025 U.S. News survey. A quarter of them (25%) want to see rates below 5% before entering the market, which isn't expected to happen in the near future.
In the time that homebuyers have been holding out for lower rates, home values have continued to rise. Home prices have appreciated by 17% since the beginning of 2022, according to the S&P CoreLogic Case-Shiller Home Price Index – despite mortgage rates doubling in that time frame.
Real estate markets are expected to stabilize this year, but buyers shouldn't expect housing prices to come crashing down, at least not on a national level. Here are a few home price forecasts from top U.S. housing groups:
- Fannie Mae: Home prices will rise 2.8% in 2025 and 1.1% in 2026.
- MBA: Home prices will rise 1.3% in 2025, followed by a 0.3% rise in 2026 and 2027.
- NAR: The median home price will rise by 1% in 2025 and 4% in 2026.
- Realtor.com: Existing home sales prices will increase by 2.5% in 2025.
- Zillow: Home values will decline 2% in 2025.
Although home values aren't likely to drop significantly, it's still positive that they probably won't keep rising at the double-digit pace seen in 2021 and 2022. Without over-the-top bidding wars to drive home prices through the roof, buyers can expect more properties to choose from. In fact, with a rising inventory of homes for sale in 2025 so far, more than a quarter of listings in June had a price cut, according to Zillow.
Buyers may also be able to close the deal without waiving important protections like home inspections and appraisal contingencies. What's more, existing home inventory is forecast to improve (at least marginally) as rates drift lower and some previously rate-locked homeowners decide to sell.
Finally, buyers may find less competition in the new home construction market. Homeowners may be reluctant to sell and sacrifice their low mortgage rates, but homebuilders remain eager to close the deal, especially as new home inventory rises. Although new-construction homes are typically more expensive than resale homes, builders may be willing to offer other concessions like price reductions or temporary interest-rate buydowns.
What Sellers Should Know: Remember That You're a Buyer, Too
Perhaps the biggest hurdle facing sellers is that they still need a place to live once they've sold their current home. For many, that means overcoming the lock-in gap to buy a new home at today's rates and home prices.
According to the Federal Housing Finance Agency, the average interest rate on existing mortgages is 4.3% – far lower than the current prevailing rate available to new homebuyers. In fact, 83% of homeowners have a rate below 6%, and rates aren't expected to dip below that threshold anytime within the next few years.
Although many prospective sellers would be hard-pressed to give up their sub-3% mortgage rate, experts predict that that the rate lock-in effect will eventually wear off somewhat as homeowners grow tired of waiting to move.
Plus, a 2023 Fannie Mae survey suggests that low rates aren't the only factor keeping people from selling. While a fifth of mortgage borrowers (21%) say that their low mortgage rate is causing them to stay in their home longer, nearly as many said they simply like their current home (19%). Perhaps unsurprisingly, 13% say they're staying put because home prices are too high.
However, there is a silver lining for sellers who are also buyers: Many homeowners are sitting on a mountain of equity thanks to double-digit home price appreciation since 2020. Successful sellers can tap into that equity to put toward their next home purchase.
