Should you buy a home in 2025? Here's what experts think.

As the new year rolls in, it's a good time to start looking at where the real estate market stands and where it may be headed. Mortgage rates sat below 5% on average from early 2011 to early 2022, and borrowers became accustomed to the low rates. In the last few years, however, rates have risen dramatically, peaking at over 8% in October 2023. 

When the Federal Reserve began cutting interest rates in September 2024, many home buyers and refinancers expected mortgage rates to follow. But the opposite happened. Mortgage rates have gone up from 6.35% in early September to the current average rate of 6.85%. The reality homeowners are facing is that rates in the 5% to low 6% range might now be considered the new "low."

Rates are expected to drop modestly this year, though, which could be enough to motivate many buyers on the sidelines to reenter the market. Home inventory has also increased in many markets, and while it's not enough to meet buyer demand, but sufficient to boost market activity. Experts also anticipate modest price gains in 2025. For example, real estate data provider CoreLogic predicts home prices will grow at a modest annual rate of 2.3% through September 2025.

In turn, the current market may be tricky for home buyers to navigate — making it tough to decide whether it makes sense to buy a home this year. 

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Should you buy a home in 2025? Here's what experts think.

So, should you buy a home in 2025? Real estate experts stress that the answer to that question is a personal one that's driven by how your financial situation stacks up against market conditions in 2025.

Why you should buy a home in 2025

More homes on the market in 2025 may create better opportunities for buyers. Higher inventory means fewer bidding wars, which may keep home prices more stable. Falling mortgage rates could also ease the cost of buying a home, though it may take time.

"I expect interest rates to stabilize and slowly come down from the middle to the end of 2025," says Jeremy Schachter, branch manager at Fairway Independent Mortgage. 

If that happens, affordability could improve slightly. At the same time, as more sellers list their homes, the rising inventory makes it less likely buyers will face the intense competition of recent years.

"I also expect more homes to be on the market as sellers lose their patience waiting for rates to drop because of their housing needs. Whether you are downsizing like an empty nester or need additional room for a growing family, sellers are slowly realizing after more than two and half years of rising rates that they might give in and get rid of that low-rate mortgage to address their housing needs," Schachter notes.

If housing inventory rises and mortgage rates ultimately ease, you might benefit from buying a home in 2025, says Paul Johansen, a real estate broker at The Corcoran Group. 

"If your finances are solid — meaning you've got a reasonable down payment saved, your debt is under control and your job feels stable — it's probably the right time," Johansen says.

As Johansen notes, purchasing a home now could also help you gain long-term stability. 

"Buying a home can lock in your housing costs, which is an obvious win when rents keep climbing. And depending on where you're looking, we might see prices stabilize or even soften a bit," Johansen says.

While buying a home in 2025 may make sense if your finances are strong, it's also important to stay informed about market conditions. You might benefit from waiting a few months, says Brian Rudderow, a real estate investor at HBR Colorado.

"I'm personally holding off buying until later in the year, specifically fall of 2025, because mortgage rates are expected to drop again along with home prices. The main risk is that the market keeps dropping after you bought," Rudderow says.

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Why you shouldn't buy a home in 2025

Simply put, you shouldn't buy in 2025 — or ever — if it isn't affordable. Take into account all the costs you'd incur, including closing costs, mortgage payments, homeowners insurance, property taxes and maintenance. If high mortgage rates result in the monthly payment being too high, waiting might be the better option.

"Affordability is a prominent problem in the housing market," says Schachter. "Increased rates on mortgages as well as higher insurance costs make the mortgage payments sometimes unobtainable or out of reach. Homebuyers might want to hold off on purchasing a home if the rates are too high to qualify for the home they desire."

You might also rethink purchasing a home in 2025 if market conditions don't change enough to make it worthwhile. 

"The market in 2025 will still be tricky. Interest rates might stay high, and in some areas inventory could stay tight, keeping prices elevated. And let's be honest: If the math doesn't work, or buying a home would stretch you too thin financially, renting or exploring other ways to grow your wealth is better," Corcoran says.

Benefits of buying a home now

As mentioned, it may be beneficial to wait for mortgage rates to drop more precipitously before purchasing a home. On the other hand, buying a home now could offer several benefits, particularly if you anticipate rising costs in your area. Locking in your housing costs now might save you money if home prices or rents in your area go up.

You may also benefit from a slower market if you buy a home in early 2025. According to Freddie Mac, the market tends to slow down during the winter months, which means fewer buyers to compete with and more motivated sellers. 

The bottom line

Deciding when to buy a home can be challenging, but it's crucial to make sure your finances are strong enough to move forward with the purchase. But whether you're unsure about buying a home now or waiting, you can prepare by improving your credit and getting preapproved for a mortgage. 

"A mortgage pre-approval is a great way to see what you'd actually qualify for. It makes the numbers real. Then, research the local market you're interested in. The key is to think about what's right for you. You want to make the right move for your situation and goals, not just because someone says it's 'the right time,'" Corcoran says.