2025 is shaping up to be another challenging year for the housing market, but it’s not all bad news. As broker-owner Lisa Chinatti and Zillow Chief Economist Skylar Olsen noted on a recent Knowledge Brokers Podcast, this will be another year for the skill-based agent—those who can adapt, strategize, and lead their clients through market uncertainty.
Olsen isn’t the only economist who thinks so. Fannie Mae’s latest predictions offer a mix of cautious optimism and hard truths, providing key insights every real estate agent needs to navigate the year ahead. Here’s what Fannie Mae expects:
- Mortgage Rates: Declining modestly to 6.4%, but still elevated compared to pre-pandemic norms.
- Existing Home Sales: Improving slightly to 4.25 million, up 4.8% from 2024, yet near 30-year lows.
- New Home Sales: A bright spot, maintaining strength at around 680,000 units annually.
- Home Prices: Slowing growth to 3.6% year-over-year, down from 5.8% in 2024, offering some affordability relief.
- Multifamily Housing: Rent growth easing to between 2% and 2.5%, providing stability for renters.
For a full breakdown from BAM co-founder Byron Lazine, watch today’s Hot Sheet.
Fannie Mae’s 5 Housing Market Predictions for 2025
Let’s break down Fannie Mae’s housing market predictions for 2025 and explore how skill-based agents can turn market challenges into opportunities.
1. Mortgage Rates: Modest Decline but Still Elevated
Fannie Mae predicts mortgage rates will average 6.4% in 2025—a slight improvement from 2024, though still above pre-pandemic norms.
The majority of housing economists agree that rates will likely remain above 6% for most, if not all, of 2025.
Rates are expected to remain volatile as the economy navigates inflation, employment shifts, and policy changes. For agents, this means guiding buyers to take advantage of temporary rate dips and educating them on how even small adjustments can significantly impact affordability.
“From an affordability perspective, we think 2025 will look a lot like 2024, with mortgage rates above 6 percent, home price growth easing from recent highs but staying positive, and supply remaining below pre-pandemic levels. Still, heightened mortgage rate volatility may present opportunities for would-be homebuyers to take advantage of temporary lows, and we may see stretches where housing activity is boosted by lower rates — but, on average, we expect mortgage rates to remain elevated and a hindrance to activity.”
Agents who collaborate with lenders offering creative financing solutions, such as rate buydowns or adjustable-rate mortgages, will be better positioned to help buyers unlock opportunities in this challenging rate environment.
2. Existing Home Sales: Modest Recovery with Regional Nuances
Existing home sales are expected to rise to 4.25 million in 2025—a 4.8% increase from 2024. However, sales will remain near historic lows due to affordability challenges and the “lock-in effect,” which keeps homeowners with low mortgage rates hesitant to sell.
Regional dynamics will play a crucial role. Inventory growth in the Sun Belt and Mountain West offers promise, while supply remains tight in the Northeast and Midwest. In markets with limited inventory, agents will need to lean into off-market opportunities, creative deal structures, and strong relationships to help clients navigate constrained options. Conversely, in regions with more robust supply, agents can capitalize on increased activity by aggressively marketing new listings and positioning their clients as competitive buyers.
3. New Home Sales: The Bright Spot in the Market
New home sales are forecasted to remain strong, with around 680,000 units expected to sell in 2025—at least in areas where building is an option. Builders are stepping up to meet demand, particularly in the Sun Belt and Mountain West, where land availability and zoning flexibility allow for growth. Many are offering incentives such as rate buydowns and introducing smaller, more affordable homes to attract buyers.
“While we think conditions on a national basis will remain challenging, we’re seeing meaningful regional differences in market conditions, and the homebuying experience — as the adage goes — will continue to be a local one. For example, in the Sun Belt, where construction has been robust for a few years and homebuilders are targeting first-time homebuyers with some offerings, we expect to see relatively strong housing activity. By comparison, we’re not expecting to see the same in the supply-constrained Northeast.”
For agents, this is a golden opportunity to build relationships with homebuilders and highlight the advantages of new construction. First-time buyers and those priced out of existing inventory are ideal candidates for new homes, and showcasing builder incentives can create a compelling case for these clients. By positioning yourself as an expert in local new developments, you’ll gain an edge in a competitive landscape.
4. Home Prices: Slower Growth Brings Affordability Relief
National home price growth is expected to slow to 3.6% in 2025, down from 5.8% in 2024. While prices won’t decline, the slower appreciation, combined with rising wages, could provide some much-needed relief for buyers struggling with affordability.
That said, regional variations will persist. Markets with higher inventory are likely to see weaker price growth, while more constrained regions may remain competitive.
Agents who can educate their clients on these nuances will thrive. Re-engaging buyers who have been sitting on the sidelines, armed with data showing how affordability conditions are improving, can help unlock transactions. Local market knowledge will be critical, particularly in regions where price trends deviate from the national average.
5. Multifamily Housing: Stability Amid Slow Growth
In the multifamily sector, rent growth is projected to ease to between 2% and 2.5%, offering relief for renters but slowing new construction due to high interest rates. Regions with a surplus of multifamily units, such as the Sun Belt, may see softer rent dynamics. This trend could shift the buy-vs.-rent equation, making homeownership more attractive in some areas.
Agents working with investors should emphasize the long-term stability of multifamily assets in high-demand areas. At the same time, renters evaluating whether to buy should be encouraged to weigh the benefits of locking in a mortgage versus continuing to rent in a cooling market. By helping clients make informed decisions, agents can turn this multifamily stability into an opportunity.
The Bottom Line: Skill Meets Opportunity in 2025
Housing market predictions for 2025 underscore one undeniable truth: real estate remains local, and relationships still drive this business. By positioning yourself as the agent who knows the numbers, understands the nuances, and advocates fiercely for clients, you’ll not only survive but thrive in this evolving landscape.
As Fannie Mae’s insights reveal, challenges are inevitable—but so is growth for those prepared to meet the moment. The market may be tough, but skill-based agents are tougher.
