Real Estate and Mortgage Market Forecast Today

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Real Estate and Mortgage Market Forecast: 2025 Housing Trends You Need To Know

If you’re considering buying a home, selling, or refinancing, you’ve probably asked: What’s the real estate and mortgage market forecast for 2025? You’re not alone. It can feel overwhelming with mortgage rates bouncing around, home prices shifting, and inventory still tight in many areas. This guide simplifies everything, allowing you to make informed decisions and proceed confidently.

At Gustan Cho Associates, we are ready to assist you in navigating the current real estate market and mortgage environment, regardless of your position in the process.

What’s Happening in the 2025 Real Estate Market?

The real estate and mortgage market forecast in 2025 shows signs of stabilizing, but conditions remain atypical. Home prices remain high, especially in the South and parts of the Midwest, though the pace of growth has slowed, and some areas are seeing steady or slightly declining prices. This trend is likely to continue into 2026, particularly in markets that experienced significant price increases in 2021 and 2022. For those asking, “Is 2026 a good time to buy a house?” the cooling market might offer better buying opportunities compared to the previous years.

2025 Mortgage Rate Forecast: Will Rates Go Down?

Understanding the potential changes in mortgage rates for 2025 requires a closer look at various factors influencing your personal situation. While predictions from Fannie Mae and Freddie Mac suggest a possible decrease in rates to the low to mid-6% range by the end of 2025, it’s essential to consider how these forecasts translate to your own borrowing options.

One of the first decisions you’ll face is whether to lock in your mortgage rate or float it. Locking in a rate ensures you secure a certain percentage, protecting you from potential fluctuations. Floating gives you the chance to snag better rates if they drop, but it also means you could end up dealing with higher rates, too. If you’re in a position to wait and believe rates may dip further, floating could be an option worth considering. However, if you find a rate that’s favorable based on your circumstances, locking can provide peace of mind.

Understanding how your personal factors—such as your credit score, debt-to-income ratio (DTI), and credit score—impact your mortgage rate is extremely important. Generally, a higher credit score means you’ll get a better rate, and having a lower DTI can help you borrow more. Additionally, buying points to lower your rate upfront can be a smart move, especially if you plan to stay in your home for a while.

Keeping up with the real estate and mortgage market forecast and talking to mortgage pros helps you figure out whether to lock in or float your mortgage rate in 2025. This way, you can snag the best possible terms that fit your situation.

Key Trends Shaping the Housing Market Forecast in 2025

Here are some of the most important trends you need to know:

1. Housing Inventory Is Slowly Growing

More homes are for sale now compared to last year, which is increasing the number of houses on the market. Builders are starting to build more homes, especially ones that are affordable. However, the total number of available homes is still lower than it was before the pandemic. This situation is putting some upward pressure on home prices.

2. More First-Time Buyers Are Entering the Market

An increasing number of first-time homebuyers are entering the real estate market due to FHA loans, VA loans, and assistance programs for down payments. This makes it easier for renters to buy homes. The real estate and mortgage market is expected to see continued interest from millennials and Gen Z as they move into homeownership.

3. Home Sellers Are Offering More Concessions

In many areas, bidding wars have lessened, meaning home sellers negotiate more flexibly. They are now more willing to pay for closing costs, lower interest rates, or make repairs after inspections. This change creates great chances for buyers in the housing market, making it easier for them to strike good deals.

What About Local Markets?

The real estate and mortgage market forecast varies by region. Here’s a quick look:

• Midwest and South: Homes are more affordable and are steadily increasing in value. They are great options for first-time buyers.
• West Coast: Prices are still high, but places like San Francisco and Seattle are seeing price drops.
• Florida and Texas: Still popular due to no state income tax, but insurance costs and property taxes are rising.

If you’re unsure where to look, Gustan Cho Associates can help you explore low-cost areas and loan programs that match your budget.

How Do Interest Rates Affect What You Can Afford?

When considering how interest rates affect buying power, it’s essential to look beyond just the principal and interest on a mortgage. The example of a $300,000 loan at a 6.5% interest rate, resulting in a monthly payment of about $1,896, typically only covers the principal and interest. If the interest rate rises to 7.5%, leading to a monthly fee of around $2,098, that’s a significant increase of over $200.

When buying a home, potential buyers should consider additional costs that can increase their monthly payments. Taxes and insurance can differ greatly based on where you live and the type of property you buy, which adds to your monthly expenses. If you put down less than 20% on a house, you might have to shell out for Private Mortgage Insurance (PMI) or Mortgage Insurance Premium (MIP). This can really impact what you’re actually able to afford.

As you contemplate purchasing a home, understanding the effect of interest rates on your buying power is crucial. Experts predict that interest rates may decrease slightly in late 2025, so it may be wise to explore options such as a 2-1 buydown or a rate float-down. These strategies can help lower your costs while still allowing you to navigate the current mortgage landscape.

What Is a 2-1 Buydown and Is It Worth It?

A 2-1 buydown is a way to make buying a home more affordable during the first few years of a mortgage. In this plan, the seller or builder pays upfront to lower the buyer’s interest rate for the first two years. In the first year, the interest rate is cut by 2% from the standard rate. It drops by 1% in the second year, then goes back to the original fixed rate in the third year and beyond.

For example, if your fixed interest rate is 7%, you would pay only 5% in the first year and 6% in the second year, before returning to 7% for the rest of the loan. This can greatly reduce monthly payments, helping homeowners adjust financially as they move into their new home. In today’s market with high rates, a 2-1 buydown can be a wise choice, and companies like Gustan Cho Associates can help negotiate this option.

What Can You Expect in a Buyer’s Market?

In 2025, many cities may shift to a buyer’s market in real estate and mortgages. This change offers several advantages for homebuyers. One key benefit is less competition, which means fewer bidding wars for homes. This setting allows buyers to negotiate better, such as asking for help with closing costs or necessary home repairs.

Additionally, homes may stay on the market longer, making sellers more flexible in negotiations. If you plan to buy a house in 2025, this could be a great chance to get more value for your money.

What About Affordable Housing and the Midwest Shortage?

The Midwest has long been seen as a place with affordable housing, but that view is changing. Demand for homes is now higher than the supply in major cities like Chicago, Indianapolis, and St. Louis. Dale Elenteny, a veteran loan officer at Gustan Cho Associates, shares his thoughts on this:

These cities face serious housing shortages, which harm lower-income families the most. In some locations, rental prices have jumped by 50-60%, making it tough for residents to find affordable places to live.

New construction is not keeping up with the demand, which is pushing many first-time homebuyers out of the market. The current real estate and mortgage market forecast situation highlights the urgent need for new ideas, like affordable housing programs, zoning changes, and teamwork between the public and private sectors, to tackle this growing crisis effectively.

What Should You Do Right Now?

Here’s how to move forward in 2025:

1. Get Pre-Approved Today

Getting pre-approved for a home loan is a key step in buying a house. It shows how much you can afford, locks in your interest rate, and tells sellers you’re a serious buyer. Gustan Cho Associates offers quick pre-approvals with no extra requirements, so we can say yes when other lenders might not.

2. Explore Special Loan Programs

We help homebuyers get approved for:

• FHA loans with as low as 500 credit score
• VA loans with no down payment
• Bank statement loans for self-employed borrowers
• 2-1 buydown mortgages and temporary rate relief options

3. Work With a Lender Who Knows the Market

We’re licensed in 50 states and have a reputation for common-sense underwriting and helping buyers succeed—even if they’ve been turned down elsewhere.

Real Estate and Mortgage Market Forecast for the Rest of 2025

Here’s what we expect for the second half of 2025:

Forecast Category	Expectation
Mortgage Rates	Gradual decline to ~6.25%–6.5%
Home Prices	Stable or slight dip in hot areas
Inventory	Slow but steady growth
Refinancing	Likely to pick up late 2025
First-Time Buyer Activity	Expected to increase

 

Final Thoughts: Is Now a Good Time To Buy?

Yes—if you’re prepared. Rates may drop, but waiting too long could mean missing out on the right home. With buyer-friendly trends emerging and flexible loan options available, now may be the smartest time in years to buy.

The real estate and mortgage market forecast may keep shifting, but with the proper guidance, you can make your move with confidence.

Ready to Take the First Step?

If you have any questions about real estate and mortgage market forecast or you need to qualify for loans with a lender with no overlays, please contact us at 800-900-8569. Text us for a faster response. Or email us at alex@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, on evenings, weekends, and holidays.

Frequently Asked Questions About the Real Estate and Mortgage Market Forecast:

What is the Real Estate and Mortgage Market Forecast for 2025?

The real estate and mortgage market forecast for 2025 shows that home prices are slowing down and mortgage rates may drop slightly later this year. It’s still a good time to buy if you’re prepared and have the right loan strategy.

Will Mortgage Rates Go Down This Year?

Yes, the real estate and mortgage market forecast suggests that mortgage rates could slowly fall to the mid-6% range by the end of 2025. If you act at the right time, this could give you a better deal on your home loan.

Are Home Prices Still Going Up?

Home prices are still high in many places, but the real estate and mortgage market forecast says prices are starting to level off or even drop a little in some cities. This gives buyers more room to negotiate.

Is 2025 a Good Time to Buy a House?

Based on the real estate and mortgage market forecast, 2025 could be a great time to buy. More homes are available, sellers are offering deals, and rates may come down a bit. The key is being ready with a pre-approval.

What Does a 2-1 Buydown Mean?

A 2-1 buydown reduces your mortgage interest rate for the first two years of your loan. This option makes sense when interest rates are high, and many buyers use it to save money in the early years of their mortgage.

Why are More People Buying Homes Now?

More first-time buyers are entering the market thanks to programs like FHA and VA loans and lower home prices in some areas. The real estate and mortgage market forecast says demand from younger buyers will keep growing.

Can I Still Get Help With Closing Costs in 2025?

Yes! According to the real estate and mortgage market forecast, sellers are more willing to offer help like paying closing costs or giving rate discounts, especially in areas with more inventory.

What if I Live in the Midwest—How Does the Forecast Affect Me?

The real estate and mortgage market forecast shows that the Midwest still has affordable homes, but there’s a housing shortage in many cities. Prices are rising slowly, and more buyers are competing for fewer homes.

What Happens if Interest Rates Go Up Again?

If interest rates go up, your monthly payments might increase, making it harder to afford a home. Experts recommend locking in a good rate or using a buydown to save money while rates are still reasonable.

How Can Gustan Cho Associates Help Me in This Market?

Gustan Cho Associates closely follows the real estate and mortgage market forecast and offers loans with no overlays, fast pre-approvals, and flexible options for low credit scores, first-time buyers, and self-employed borrowers.

This blog about “Real Estate and Mortgage Market Forecast Today” was updated on December 17th, 2025.