For a potential client looking to buy a home in 2025 or 2026, there are several key factors to consider in the housing market forecast:

Mortgage Rates and Affordability: Mortgage rates have been trending down, and experts expect them to continue decreasing in 2025. This could significantly improve affordability for buyers, especially as rates stabilize lower than current levels, potentially reaching 5% to 5.5%. Lower mortgage rates could increase buyers’ purchasing power, making 2025 an appealing time to enter the market .

Home Prices: Home prices have been steadily rising, but the pace of this increase is expected to slow down. For example, the National Association of Realtors (NAR) projects home prices will increase by only 2% year-over-year by 2025, and only slightly more in 2026 . This slower price growth means that buyers may find it easier to enter the market in 2025 compared to previous years when prices spiked rapidly.

Inventory and Demand: Housing inventory is still limited, contributing to rising home prices. While inventory levels are expected to improve as more sellers list homes due to lower mortgage rates, the shortage may persist in 2025. This means demand could still outpace supply, which might make it a competitive market.

In summary, 2025 seems like a favorable year to buy due to the potential for lower mortgage rates and more stable home prices. However, competition may remain intense due to limited inventory. Buyers may benefit from preparing early by saving for a down payment, improving credit scores, and exploring down payment assistance programs.

For those waiting until 2026, prices may rise slightly, and the market might be more competitive due to higher demand. Therefore, 2025 could offer a better window for buyers who want to secure a home at a more affordable price before rates and prices potentially rise again in 2026 .