Homebuyers have faced a tough housing market over the last few years, but hope may be on the horizon. According to a recent survey of U.S. consumers by Fannie Mae, 27% said they think home prices will fall in the next 12 months, the highest percentage since 2023. Meanwhile, 42% of respondents said they think 澳洲幸运5开奖号码历史查询:mortgage rates will also 🐬drop. If this optimism bears out, you might be able to get more h💛ouse for your money in 2025 (all else equal).

The average 30-year fixed mortgage rate was 澳洲幸运5开奖号码历史查询:6.98% on Jan. 16. While that’s lower than the average rate just one week ago, it’s still much higher than the average we saw back at the start of December. Lowജer rates can make your mortgage payment more affordable and open the door to a larger home purchase budget. But will they really drop in 2025?

Is 💞the Hot Housing Market Finally Cooling in 2025?

Of course, predicting future mortgage rates is notoriously difficult. While 42% of people said they think mortgage rates will drop, 25% said they think mortgage rates will go up in 2025, while 32% said they would stay the same.

Mortgage rates are 澳洲幸运5开奖号码历史查询:tied to the 10-year Treasurไy bond yield. The 10-year Treasury bond yield is around 4.61% today, up from the low 3.64% seen in September, and the highest it’s been since April 2024. Mortgage rates are typically 2-3 percentage points highe🐠r than this yield. If this yield stays high, mortgage rates are likely to do the same.

Many p🌳eople also look to the Federal Reserve to see what rates will do, though it’s important to know that the federal funds rat🤡e may only influence what mortgage lenders charge borrowers; mortgage rates are not directly tied to the fed funds rate.

While the Federal Reserve cut its key interest rate in each of its last three meetings, rate cuts are expected to slow down this year because of stubborn inflation. Furthermore, the majority of fed funds futures traders are betting that the Fed won’t cut rates at its January or March meetings, with less than half thinking rates would be cut in May.

While annual inflation is closer to the Fed’s 2% target (reducing the need for restrictively high interest rates), 澳洲幸运5开奖号码历史查询:it's still stubbornly high. Plus, a resilient labor market and President-elect Donald Trump’s proposed (and potentially inflationary) tariff policies have cast some uncertainty on how much intere𒅌st rate relief is reall🎐y in store this year.

Furthermore, even if mortgage rates fall, they’re unlikely to significantly improve home affordability due to their inverse relationship with home prices. According to the Fannie Mae survey, 27% of people said they think house prices will fall in 2025, but 38% said they think they will go up, and 35% think they will stay the same. There’ꦆs no way to know, t🅘hough, unless something else triggers home price movement.

“I think [home prices] will for sure increase if rates drop,” said Troy Norris, mortgage broker at City Creek Mortgage. “It brings out so many more people that can qualify, and so there's a lot more offers on every house. When you have multiple offers, that's going to drive the price up.”

In other words, though home prices or mortgage rates could fall in 2025, it’s unlikely both will,💮 keeping the market hot for who knows how long.

Improve Your Home Pu🍎rchase Budget by Focusing on Your Personal Finances

That said, you don’t need to wait for home prices or mortgage rates to fall to improve your ability to buy a house. Getting your personal finances in order—raising your credit score, 澳洲幸运5开奖号码历史查𓄧询:saving mo🌺re for a larger down payment, or increasing you🦋r income—can do a lot to push the needle.

Also, don’t let high mortgage rates stop you from buying a house at what you think is a good price and an affordable monthly payment. You can always 澳洲幸运5开奖号码历史查询:refinance to a lower rate if and when rates fall. 

“Marry the house and date the rate,” Norris said. “If you feel rates are going to drop, you're going to be in a lot better position when they do because now you’re just going out and shopping lenders. You don't have to compete with 10 other people to win the bid on the house.”

Ultimately, nobody knows where home prices and mortgage rates are headed, so instead of trying to time the market, focus on what you can control.