M
ortgage rates are expected to remain above 6% next year, while home prices continue to rise, according to Realtor.com's new 2025 housing forecast. The report predicts mortgage rates will average 6.3% across 2025 and end the year at 6.2%, still higher than the historical average of 4% from 2013 to 2019.

    Home prices are projected to grow an additional 3.7% through next year, following a 4% increase this year and 1.1% in 2023. Sales of previously owned homes are expected to rise by 1.5%, reaching 4.07 million units, but remain below the historical average of 5.28 million.

    The supply of homes for sale will continue to improve, increasing by 11.7% across 2025, while new-home construction is forecasted to expand by 13.8% from 2024 to 1.1 million new units started next year.

    Despite the persistence of high mortgage rates and rising inventory, home price growth has shown an upward trend in recent years. Mortgage payments are expected to remain essentially unchanged in 2025 despite continued home price growth.

    The outlook for prospective homebuyers is mixed, with elevated mortgage rates offset by growing supply and increased listings with price reductions. Affordability remains near record lows, but slight improvements are forecasted due to growing wages or tax breaks.

    Buyers can expect a friendlier housing market in 2025, although one that remains costly due to high mortgage rates and home prices. Sellers may have the upper hand in price negotiations in certain areas, particularly in desirable locations with strong demand.

    Rental trends in 2025 are expected to be soft, with asking rents dropping by 0.1% after growing 1.2% in 2023 and dipping 0.2% this year. Rent growth remains below the historical average due to an influx of new multifamily housing units constructed in recent years.

    A robust multifamily construction pipeline is expected to continue driving rental supply growth in 2025, pushing the vacancy rate back toward its long-term average. The South is forecasted to lead rental stock growth at an annual increase rate of 1.5%, followed by the West, Midwest, and Northeast.