What does the future of housing look like as we head into the second half of 2025?
While no one has a crystal ball, we are breaking down the housing forecasts on home prices, existing home sales, and mortgage rates from industry economists:
- Fannie Mae
- Zillow
- The National Association of REALTORS® (NAR)
- Mortgage Bankers Association (MBA)
- Cotality (formerly CoreLogic)
- Home Price Expectations Survey (HPES)
Together, these forecasts offer a view of where the market is likely headed, covering everything from mortgage rates and existing home sales to regional price trends and the mortgage originations.
Here’s what real estate professionals need to know.
Home Prices: Slower Growth, Regional Divergence
The general consensus is that home price appreciation will be modest, with some markets even seeing year-over-year declines.
- Cotality forecasts 4.3% home price growth from April 2025 to April 2026.
- Fannie Mae: latest forecast predicts 4.1% growth in home prices in 2025.
- HPES: Fannie Mae’s Home Price Expectations Survey, which polls over 100 housing industry experts, expects an average of 3.3% annual home price growth in 2025.
- NAR is forecasting 3% appreciation in 2025 and 4% in 2026.
- MBA projects growth to slow to 1.3% appreciation by the end of 2025, and remain below 1% in 2026.
- Zillow projects a 1.4% decline in home values for 2025, citing rising inventory and hesitant buyer activity. The company had previously forecast a steeper drop of 1.9%, so while the outlook is still negative, the revision suggests some stabilizing
It’s worth noting where the biggest corrections are happening. According to Cotality, Florida, Texas, Hawaii, and Washington D.C. have all entered negative territory for price growth. Cape Coral, Florida, tops the list with a 7% year-over-year decline.
Meanwhile, more affordable suburbs in the Northeast and Midwest continue to show strong gains, particularly those adjacent to higher-cost urban centers.
Existing Home Sales: Recovery on the Horizon
There’s cautious optimism when it comes to existing-home sales, though the outlook varies significantly by source.
- NAR is the most bullish, projecting a 6% increase in existing-home sales for 2025, followed by an 11% gain in 2026. They also expect new-home sales to grow 10% next year, with a 5% bump the year after.
- Fannie Mae expects a more moderate recovery, with a 4.4% increase in existing home sales in 2025 (4.238 million).
- Zillow now expects 4.12 million existing-home sales in 2025, a 1.4% increase from 2024, but still down slightly from its previous forecast of 4.2 million.
- MBA anticipates approximately 4.3 million existing-home sales in 2025.
Sales activity is expected to improve next year, but the gains will likely be incremental. A full recovery to pre-pandemic levels remains a longer-term play, and will depend heavily on mortgage rate trends and affordability improvements.
Mortgage Rates: A Slow Descent
All three sources forecasting rates agree that mortgage rates will remain above 6% for most of 2025, though they differ on how much relief to expect.
- MBA anticipates rates will average 6.6% in Q4 2025, easing slightly to 6.5% for the first two quarters of 2026 and 6.3% by the end of the year.
- NAR pegs the second-half average for 2025 at 6.4%, dropping to 6.1% in 2026.
- Fannie Mae is a bit more optimistic, forecasting 6.1% by the end of 2025 and 5.8% by year-end 2026.
While a return to sub-5% rates isn’t on the table any time soon, the expectation of slow, steady easing could bring back more buyers currently sitting on the sidelines.
NAR Chief Economist Lawrence Yun calls rates the “magic bullet” for the market and says we’re “waiting and waiting until those come down.”
Mortgage Originations: Modest Rebound Expected
With fewer homeowners refinancing at higher rates, purchase originations will continue to drive overall volume, and expectations for growth reflect that.
- Fannie Mae expects $1.99 trillion in originations in 2025, rising to $2.38 trillion in 2026.
- MBA projects $2.07 trillion in 2025, which includes $1.4 trillion in purchase volume and $672 billion in refinance volume. Their 2026 forecast matches Fannie Mae’s at $2.38 trillion.
The gap in 2025 projections highlights differing assumptions about the pace of economic recovery and rate declines. But by 2026, both forecasts converge, suggesting broader confidence in the long-term rebound.
The Bottom Line for Agents
- Expect modest improvement in 2025, with a stronger rebound by 2026. Forecasters agree the market is past its lowest point, but recovery will take time.
- Mortgage rates will likely stay above 6% through next year, which means buyer education and affordability conversations will remain critical.
- Regional price corrections are underway, especially in overheated markets like Florida and parts of Texas, while more affordable metros in the Northeast and Midwest are seeing growth.
- Supply is increasing, and with it comes more opportunities for buyers and for the agents who know how to guide them.
In a market like this, data-driven advice wins. Agents who understand these shifts and help clients navigate them will be the ones clients trust most.
