Housing Market Forecasts for the Second Half of the Year
May 14, 2025
From rising home prices to mortgage rate swings, the housing market has left a lot of people wondering what’s next – and whether now is really the right time to move. There is one place you can turn to for answers you want the most. And that’s the experts.
Leading housing experts are starting to release their projections for the rest of the year. These insights will give you clarity – and a little more optimism than you might expect. Business Insider sums up the forecasts (and why they’re good news for you):
“As mortgage rates go down this year, affordability may improve slightly for homebuyers. Inventory is also expected to grow, which should help moderate price growth and make finding a home easier.”
Let’s break it down.
1. Mortgage Rates Should Come Down (Slightly)
While a major drop isn’t on the table, forecasters are calling for a modest decline in rates in the months ahead as the economic outlook becomes more certain. Based on the information we have right now, here’s a look at where they say rates should be by year-end(see graph below):
Even this slight decrease is a welcome change. A seemingly small decline can still help bring down your future mortgage payment and give you a bit more breathing room in your budget.
Just remember, everything from inflation to employment and broader economic shifts will have an impact on where rates go from here. So, don’t try to time the market. And do expect some volatility along the way.
2. Inventory Will Continue To Grow
Inventory has already improved a lot this year. A big portion of the growth the market has already seen is because homeowners are getting tired of sitting on the sidelines. They’ve tried the wait and see approach with rates, and it hasn’t really paid off. And at a certain point, you need to move no matter what the market is doing. This is one reason more homes have been listed lately. And experts say that should continue. As Lance Lambert, Co-founder ofResiClub, says:
“The fact that inventory is rising year-over-year . . . strongly suggests that national active housing inventory for sale is likely to end the year higher.”
If rate forecasts pan out as the experts say, that could be enough to tip some more sellers off the fence and back into the market – giving you even more options for your move.
3. Home Prices Are Moderating
As more homes hit the market, there will also be less upward pressure on home prices. Expert forecasts are still calling for growth, but the pace of that growth is slowing down as inventory climbs. The average of all 7 forecasts shows prices will rise about 2% this year (see graph below):
That means you could finally get a little bit of relief from rapidly rising home prices. When you combine the forecast for healthier price growth with projections for slightly lower mortgage rates, that could mean more buying power in the months ahead.
Keep in mind, though, the housing market is hyper-local. So, this is going to vary by area. Some markets will see prices climbing higher. And some may even see prices dip a little if inventory is up significantly in that location. So, lean on a local agent for insights into what’s happening in your area.
Bottom Line
So, if you want or need to move this year, know that the experts say things should start looking up. Let’s connect so you can take advantage of any market shifts that work in your favor.
After several years of high mortgage rates and hesitation from buyers, momentum is quietly building beneath the surface of the housing market. Sellers are reappearing. Buyers are re-engaging. And for the first time in what feels like forever, there’s movement happening again. No, it’s not a surge. But it is a shift – and it’s one that could set the stage for a stronger year in 2026. So, what’s driving the comeback? Here are three big trends that are slowly breathing life back into the housing market right now. 1. Mortgage Rates Have Been Coming Down Mortgage rates are always going to have their ups and downs – that's just how rates work. Especially with the general economic uncertainty right now, some volatility is to be expected. But, if you zoom out, it’s the larger trend that really matters most. And overall, rates have been trending down for most of this year ( see graph below ):
There’s been a lot of talk lately about how a government shutdown impacts the housing market. You might be wondering: Is it causing everything to grind to a halt? The short answer? No. The housing market doesn’t stop. It keeps moving. Homes are still being bought and sold, contracts are still being signed, and closings are still happening. The difference is that a few parts of the process may slow down a little, but overall, the market continues to function. Here’s What Typically Happens Whenever the government shuts down, some federal agencies temporarily close or scale back their operations. That can cause a few hiccups in real estate, especially when it comes to processing certain types of government loans and insurance requirements: “ Applicants for FHA, VA, or USDA loans—which account for about one-quarter of all mortgage applications—may encounter significant processing delays due to agency furloughs.” - Selma Hepp, Chief Economist at Cotality “By recent estimates, more than 2,500 mortgage originations per working day are at risk of delays during a shutdown . . . ” - Zillow Flood insurance approvals may also be paused. The National Flood Insurance Program can be temporarily affected , which delays closings in flood zones. Even with those challenges and delays, most transactions still go through. Buyers keep buying, sellers keep selling, and agents keep helping people move forward. The Housing Market Usually Bounces Back Fast And you can see that play out in this data. If you look back at the most recent government shutdown that began at the end of 2018 and lasted for 35 days, sales activity dipped very slightly during the closure but picked right back up once the government reopened. Data from the National Association of Realtors (NAR) shows existing home sales slowed for about two months, and then rebounded quickly as delayed closings worked their way through the system when the government reopened (see graph below):
If you’ve served in the military (or if your spouse has), you have access to one of the most powerful homebuying tools out there. The chance to buy a home without having a down payment. Unfortunately, 70% of Veterans (that's 7 out of every 10) don’t know about this benefit, according to Veterans United.
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If there was one simple step that could help make your home sale a seamless process, wouldn't you want to know about it? There’s a lot that happens from the time your house goes under contract to closing day. And a few things still have to go right for the deal to go through. But here’s what a lot of sellers may not know. There's one part of the process where some homeowners are hitting a road bump that’s causing buyers to back out these days. But don’t worry. The majority of these snags are completely avoidable, especially when you understand what’s causing them and how to be proactive. That’s where a great agent (and a little prep) can make all the difference. What’s Causing Some Buyers To Back Out The latest data from Redfin says 15% of pending home sales are falling through. And that’s not wildly higher than the 12% norm from 2017-2019. But it is an increase. That means roughly 1 in 7 deals today don’t make it to the closing table. But, at the same time, 6 out of 7 do. So, the majority of sellers never face this problem – and odds are, you won’t either. But you can help make it even less likely if you know how to get ahead. You might assume the main reason buyers are backing out today is financing. But that’s actually not the case. The most common deal breaker today, by far, is inspection and repair issues (see graph below):
Scroll through your feed and you’ll see plenty of finger-pointing about why homes cost so much. And according to a national survey, a lot of people believe big investors are to blame. Even though data shows that’s not true, nearly half of Americans surveyed ( 48% ) think investors are the top reason housing feels so expensive ( see graph below ):
You’ve got big plans for 2026. But what you do this year could be the difference between a smooth sale and a stressful one. If you’re thinking of selling next year, the smartest move you can make is to start prepping now. As Realtor.com says : “If you’re aiming to sell in 2026, now is the time to start preparing , especially if you want to maximize the spring market’s higher buyer activity.” Because the reality is, from small repairs to touch-ups and decluttering, the earlier you start, the easier it’ll be when you’re ready to list . And, the better your house will look when it’s time for it to hit the market. Why Starting Now Matters Talk to any good agent and they’ll tell you that you can’t afford to skip repairs in today’s market. There are more homes for sale right now than there have been in years. And since buyers have more to choose from, your house is going to need to look its best to stand out and get the attention it deserves. Now, that doesn’t mean you have to do a full-on renovation. But it does mean you’ll want to tackle some projects before you sell. Your house will sell if it’s prepped right. And you don’t want to be left scrambling in the spring to get the work done. Because here’s the advantage you have now. If you start this year, you’ll be able to space those upgrades and fixes out however you want to. More time. Less stress. No sense of being rushed or racing the clock. Whether it’s fixing that leaky faucet, repainting your front door, or finally replacing your roof, you can do it right if you start now. And you have the time to find great contractors without blowing your budget or paying extra for rushed jobs. Get My Advice Early To figure out what’s worth doing and what’s not in our market, you need to talk to me early . That way you’re not wasting your time or money on something that won’t help your bottom line. As Realtor.com explains : “Respondents overwhelmingly agree that both buyers and sellers enjoy a smoother, more successful experience when they start early. In fact, a recent survey reveals that, for sellers, bringing a real estate agent into the process sooner can pay off significantly. ” A skilled agent like me can tell you: What buyers in our local area are looking for The repairs or updates you need to do before you list How to prioritize the projects, if you can’t do them all Skilled local contractors who can help you get the work done And having that information up front is a game changer. To give you a rough idea of what may come up in that conversation, here are the most common updates agents are recommending today, according to research from the National Association of Realtors (NAR):
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If you’ve seen headlines or social posts calling for a housing crash, it’s easy to wonder if home values are about to take a hit. But here’s the simple truth. The data doesn’t point to a crash. It points to slow, continued growth. And sure, it’s going to vary by local area. Some markets will see prices rise more than others. And some may even see small , short-term declines. But the big picture is: home prices are expected to rise nationally, not fall, over the next 5 years. The Real Story Is in the Expert Forecasts In the Home Price Expectations Survey (HPES) from Fannie Mae, each quarter over 100 leading housing market experts weigh in on where they project home prices will go from here. And in the report that was just released, the experts agree prices are projected to climb nationally through at least 2029 ( see graph below ):
These days, you’re going to want to get your price right when you get ready to sell your house. Honestly, it’s more important than ever. Why? While you may want to list high just to see what happens, that’s a plan that can easily backfire, and it’s going to cost you in today’s market. And the risk isn’t just missing out on offers, it’s missing out on the move you needed to make in the first place. The Real Pitfall of Overpricing Many homeowners remember what their neighbor’s house sold for a few years ago, and they want to chase that same sky-high number. The problem is, that was a different market. Today, there are more homes for sale . Buyers have more options to choose from. They don’t have to get into bidding wars where they offer way over asking just to compete. Now they can come in at, or even below, list price. And if you’re not open to that, they’ll move on. Lisa Sturtevant, Chief Economist at Bright MLS, explains: “Buyers will have more leverage in many, but not all, markets. Sellers will need to adjust price expectations to reflect the transitioning market.” But here’s the good news. You still have one big advantage as a seller. According to the Federal Housing Finance Agency (FHFA), home values went up by a staggering 54% over the last 5 years. So, even if you compromise just a little bit on your sale price today, odds are you’ll still come out way ahead. The challenge? Most sellers aren’t thinking about it that way. They’re stuck on what a neighbor got months or years ago – and that’s a costly mistake. Overpricing Can Stall Your Whole Move Here’s what happens. A seller lists too high. Buyers stay away. No offers come in. The house sits. And suddenly, that seller is facing a tough decision. Do they cut the price? Stick it out? Or give up altogether? Unfortunately, a late price cut may not be enough. Buyers often see that as a red flag that something’s wrong with the house. That’s why some sellers are opting to just pull their listing off the market entirely. In a recent survey from John Burns Research and Consulting (JBREC) and Keeping Current Matters (KCM) over half of agents (54%) say there are more homes being taken off the market than usual.
