2025 Could Be The Year To Buy A Home – The Mortgage Note

Image by Gerd Altmann from Pixabay

As the ball drops on New Year’s Eve and 2025 begins, people making the resolution to turn their homebuying dreams into reality will not be alone.

Next year, total mortgage origination volume is expected to increase to $2.3 trillion, according to a report from the Mortgage Bankers Association. In 2024, $1.79 trillion was anticipated.

“There’s a lot of economic optimism heading into 2025. Consumer confidence is the key to home buying,” Aaron Gordon, Guild Mortgage branch manager in Henderson, Nevada, told The Mortgage Note. “As we’ve seen, the entry level has really stalled, but the step-up buyers have maintained some momentum.”

Three percent interest rates are “great, and have certainly kept folks in their homes longer,” he continued. But, at some point, “many of us require — or strongly desire — change. We need to see rates closer to 6% than 7%, but when that comes, as we saw in early September, activity will increase,” said Gordon.

He added: “we’re anticipating a significant market rebound, with projections indicating a 9% increase in existing home sales and an 11% jump in new home sales. Economic conditions are expected to improve, which should boost consumer confidence and purchasing power.”

The median age of first-time home buyers, Gordon observed, has reached an all-time high of 38.

“This delay might lead to pent-up demand as these buyers finally enter the market,” he said.

Jason Mesnick, principal broker, The Real Brokerage in Seattle, told The Mortgage Note that his outlook closely reflects the MBA’s.

“I agree that stabilizing mortgage rates and improving inventory will help drive a stronger market in 2025. I’m already seeing more first-time buyers looking at new construction as a smart option, which lines up with their forecast.”

While affordability remains a challenge, Mesnick believes there will be “plenty of opportunities for buyers who are prepared and working with the right guidance.”

For his part, Chris Speicher, co-founder and realtor at Speicher Group of Real in Gaithersburg, Maryland, added that home price growth is moderating, with a projected 2% increase in median home prices for 2025, “which is more modest compared to recent years.”

“If mortgage rates moderate, it could improve affordability for many buyers,” Speicher said.

Speicher said buyers are adapting to affordability challenges through increased reliance on family support, multigenerational living arrangements, and growing interest in newly built homes.

Who is expected to purchase a home in 2025?

Demographics, said Mesnick, ”are a huge factor in supporting housing demand. Younger buyers entering their prime homeownership years are driving a lot of activity, and I see it firsthand: there’s a lot of excitement and motivation among this group.”

Long-term affordability is a concern for this demographic because in addition to high home prices, they face the rising costs of property taxes and insurance. But Mesnick believes opportunities remain for buyers — especially with “creative strategies, like exploring new construction or less competitive neighborhoods.”

With the right planning, he continued, many of these younger buyers can still make their homeownership dreams a reality.

There are some experts who remain cautiously optimistic about 2025.

Samir Dedhia is the CEO of One Real Mortgage in Iselin, New Jersey.

“I’m cautiously optimistic about increased mortgage origination volume in 2025. Demographic trends, especially younger generations entering their prime homebuying years, are likely to keep demand strong,” Dedhia said.

That said, “we can’t ignore potential challenges like interest rate fluctuations, inflation, and shifts in policy. Discussions about the privatization of Fannie Mae and Freddie Mac raise concerns about potential increases in mortgage costs, which could impact affordability. It’s crucial that any policy changes support accessibility and market stability.”

Dedhia encourages buyers to take a proactive approach to their budgeting. Overestimating expenses can ensure they are prepared for the homebuying journey and then homeownership itself, he said.