What To Expect from Mortgage Rates and Home Prices in 2025

Curious about what lies ahead for Chicago homes in 2025? The outlook is optimistic, with encouraging forecasts for mortgage rates and home prices. Real estate professionals are sharing insights that could influence your buying or selling decisions.

Mortgage Rates Are Expected To Decline
Mortgage rates, a key factor in the housing market, are predicted to decrease in 2025. While rates have surged in recent years, experts anticipate a gradual easing throughout the year. Although the trend may include some fluctuations due to economic data and inflation updates, the overall outlook remains positive.

Lower mortgage rates mean better affordability, potentially reducing monthly payments for Chicago homes. As rates decline, demand is likely to grow, prompting more buyers and sellers to enter the market. Charlie Dougherty, Director and Senior Economist at Wells Fargo, notes, “Lower financing costs will likely boost demand by pulling affordability-crunched buyers off of the sidelines.” This increased activity will also enhance competition for available properties. Lean on your real estate agent to stay ahead of market shifts and understand the impact of changing rates on demand in the area.

Modest Home Price Growth Projected
While mortgage rates are set to decline, home prices are expected to rise at a more manageable pace. Experts predict an average 2.5% growth in home prices nationally, which is more sustainable compared to the rapid increases seen in previous years.

This price growth is linked to demand, as more buyers reenter the market. Additionally, as sellers feel less constrained by high rates, more homes will be listed, helping to balance the market. Although prices may increase, a healthier supply could help maintain manageable price growth.

It’s essential to remember that these national trends may not exactly reflect the Chicago real estate market. Some neighborhoods may see quicker appreciation, while others experience slower growth. As Lance Lambert, Co-Founder of ResiClub, explains, “Even if the average national home price forecast for 2025 is correct, some regional housing markets could see mild home price declines, while others may still see elevated appreciation.”

To navigate these trends effectively, it’s crucial to work with experienced real estate professionals who understand the local market. MPG is here to provide a clear picture of what’s happening with Chicago homes, offering guidance tailored to your needs.

The Bottom Line
With mortgage rates set to ease and home prices projected to grow at a more moderate pace, 2025 is shaping up to be a promising year for buyers and sellers. Connect with us---we're happy to help you stay informed about the latest developments and learn how these market trends could impact your plans.