H
ome sales are expected to rebound in Colorado and nationwide after two sluggish years, but buyers shouldn't count on significant drops in mortgage rates. According to the National Association of Realtors, homeowners can expect modest price gains of around 2% next year, with some areas potentially seeing higher growth. However, this may not be enough to improve affordability if mortgage rates remain high.

    Realtor.com has named Colorado Springs as its top market for 2025, citing an above-average rebound in sales and prices after two flat years. Denver ranks 20th on the list. The housing market's recovery will depend heavily on borrowing costs, with experts predicting that 30-year mortgage rates may not dip below 6%.

    Lawrence Yun, NAR chief economist, attributes high mortgage rates to the national debt, which has grown from $20 trillion in 2016 to over $35 trillion today. This reduced private capital for mortgages keeps rates elevated. The Federal Reserve's recent interest rate cuts are expected to have a limited impact on long-term rates.

    Mike Fratantoni, chief economist with the Mortgage Bankers Association, predicts that 30-year mortgage rates will remain around 6.5% next year, disappointing would-be buyers seeking lower rates. Lower mortgage rates could encourage more first-time buyers into the market, but Yun forecasts only a 2% rise in median home prices nationally.

    The housing market has faced two difficult years, with existing home sales declining on a year-over-year basis from July 2021 to September 2024. Metro Denver saw a 20,000-home drop in sales compared to the same period in 2021 and 10,000 fewer than in 2022. However, sales are now tracking close to 2023 levels, with a 6% annual increase in November.

    Nationally, home sales rose in October year-over-year, marking a long-awaited turn in the market. Yun forecasts existing home sales could rise between 7-12% next year and another 10-15% in 2026. New home sales are expected to increase by 11% next year and 8% in 2026.

    Realtor.com's Danielle Hale predicts weaker growth in home sales, at just 1.5%, but stronger gains in median home prices nationally, at 6%. Homeowners have built a record $5 trillion in home equity since the onset of COVID-19, with delinquencies near record lows.