You’ve seen the headlines. One day it’s a "housing collapse" and the next it’s a "market rebound." Honestly, it’s enough to make anyone just want to keep renting forever. But if you’re trying to actually plan your life, you need to look past the clickbait.
The 2025 housing forecast mortgage rates story isn't a simple "up or down" narrative. It's a weird, grinding transition. We just finished a year where existing home sales hit a 30-year low—tying with 2024 for the worst performance since 1995. Lawrence Yun, the Chief Economist at the National Association of Realtors (NAR), basically called 2025 a "tough year" marked by record prices and stagnant sales.
But things are shifting. As of mid-January 2026, we’re looking back at a year that started with rates near 7% and ended with them flirting with the 6% mark.
Why the 2025 housing forecast mortgage rates didn't tank (like we hoped)
Most people expected 2025 to be the year rates plummeted back to 4%. That didn't happen. Not even close.
The Federal Reserve did its part, cutting the federal funds rate multiple times in late 2024 and throughout 2025. However, mortgage rates are stubborn. They follow the 10-year Treasury yield, which stayed elevated because the economy—kinda surprisingly—remained pretty resilient.
- Fannie Mae originally thought rates would hit 5.9% by early 2025. They had to walk that back, eventually revising their year-end 2025 forecast to around 6.2% to 6.5%.
- The Mortgage Bankers Association (MBA) was a bit more optimistic, hoping for 6.4%, which actually turned out to be closer to the reality on the ground for most of the year.
- Zillow and Redfin data shows that the national average for a 30-year fixed rate finally dipped to 5.99% only in the last weeks of December 2025 and into January 2026.
Wait. Why does that 1% difference matter?
If you're looking at a $500,000 home with 10% down, a 7% rate puts your principal and interest at roughly $2,994. Drop that to 6%, and you’re at $2,698. That’s $300 a month. Over 30 years? That’s over $100,000.
The "Lock-In" effect finally cracked
For the last few years, we’ve been stuck in a stalemate.
Homeowners with 3% rates from the pandemic refused to sell. Why would they? Moving meant doubling their interest rate. This "lock-in effect" strangled the supply of homes.
But 2025 changed the math. Life happens. People had babies, got new jobs, or got tired of their cramped kitchens. By the time mortgage rates hit the low 6s in late 2025, the "spreadsheet" started to make sense again. According to a Bankrate survey from July 2025, about 40% of homeowners said they’d feel comfortable selling once rates stayed below 6%.
We are seeing that play out right now. Inventory at the end of December 2025 was up about 3.5% compared to the previous year. It’s not a flood of houses, but it’s a leak in the dam.
Who predicted what?
It’s actually sort of funny to look at how wrong—or right—the big players were.
| Expert Source | Early 2025 Rate Prediction | Where we actually ended (Dec 2025) |
|---|---|---|
| NAR | 5.8% | 6.15% |
| Fannie Mae | 6.5% | 6.2% |
| Wells Fargo | 6.5% + | 6.2% |
| Goldman Sachs | 6.1% | 6.15% |
Basically, the "Higher for Longer" crowd won the first half of the year, while the "Soft Landing" optimists won the second half.
Prices didn't drop. They just stopped soaring.
If you were waiting for a 20% price crash, I’ve got bad news.
The median national home price actually rose about 1.7% in 2025, reaching a record high of $414,400. In some places, like the Northeast, prices jumped even more—up 3.7%.
Low inventory is a shield for prices. Even with fewer buyers, there were even fewer houses. This meant that while the "days on market" increased (to about 39 days on average), sellers still held the cards.
What this means for your 2026 moves
The 2025 housing forecast mortgage rates data tells us that 6% is the new 3%. It’s the mental threshold for the market.
If you are waiting for 4% again, you might be waiting for a decade. Experts at Morgan Stanley and Bankrate are projecting that 2026 could see rates dip into the high 5s—maybe 5.7% or 5.8%—but they expect things to stay "range-bound."
Here is the reality: Affordability is still a nightmare for many. Even though rates are lower than their 7.8% peak in 2023, prices are 30% higher than they were before the pandemic.
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Actionable steps to take now
- Watch the 10-year Treasury, not just the Fed. Mortgage rates move when the bond market moves. If the 10-year yield stays above 4%, don't expect mortgage rates to dive.
- Get a "Rate Lock" strategy. Volatility is the only constant. If you find a home you love and the rate is 6.1%, ask your lender about "float down" options in case rates drop during your escrow.
- Check the "days on market" in your specific zip code. National averages are useless for individual buyers. In some Florida markets, inventory is surging and you have leverage. In places like San Diego or Boston, it's still a dogfight.
- Stop timing the bottom. If you can afford the payment now, buy the house. You can refinance the rate later, but you can't "refinance" the purchase price if it goes up another 3% next year.
The housing market isn't "broken"—it's just recalibrating. The days of free money are over, but the era of the 30-year low in sales is finally coming to an end.