E
xperts from Fannie Mae and Veterans United Home Loans predict a solid year for new home sales, modest declines in mortgage rates, and faster wage growth in 2025. Key points include:

    Affordability will remain a challenge due to high mortgage rates above 6%, but temporary lows could benefit buyers, and price growth is expected to slow.

    Existing home sales are forecasted to improve somewhat, ending the year at around 4.25 million.

    New home sales will continue to be a bright spot, but rising labor and construction costs may cause builders to pull back on housing starts.

    Mortgage rates will likely remain above 6% in 2025, with temporary lows presenting opportunities for buyers. Veterans United predicts mortgage rates will average 6.5% initially, then decline to 6.3% by year-end.

    Price growth is expected to slow, with Veterans United forecasting 3.2% and Fannie Mae predicting 3.6%. Regional differences are likely, with the Sun Belt seeing relatively strong housing activity.

    Existing home sales will improve modestly, with Veterans United forecasting between 4.2-4.5 million sales and Fannie Mae targeting 4.25 million.

    Affordability challenges may lead to more creative financing solutions and loan products, as well as increased seller concessions and incentives.

    New home inventory will drive a hard bargain, but the Sun Belt is expected to lead in new home production due to ample construction inventory and a narrowing price gap between new and existing homes.