Mortgage rates are unlikely to return to the ultra-low levels seen during the pandemic or the pre-pandemic levels, according to a report from an industry group.
The National Association of Realtors released its 2025 outlook on Thursday.
It warns that affordability will remain a concern for many, particularly in high-demand markets.
The organization forecasts mortgage rates to stabilize near 6% in 2025, likely establishing what it calls "a new normal."
It expects more buyers are expected to come back to the market as rates retreat from highs that breached 7% at times.
The realtors group expects activity to increase in the coming year.
When mortgage rates fall below 6.5%, the qualifying income required to purchase a median-priced home drops below $100,000, which is less than the estimated median family income, the group reports.
If rates stabilize around 6%, about 6.2 million households can once again be able to afford median-priced homes, according to the report. That is compared to the current constraints with rates near 7%.
The group says that inventory levels are gradually improving and are expected to increase in 2025.
There will be an expected 1.45 million housing starts in 2025 and 1.11 million of them will be single-family homes. About 340,000 multifamily housing starts are expected in the next year.
As for home values, the group expects the median existing-home price in 2025 to be $410,7000.
Millennials represent a significant portion of first-time homebuyers, according to the association. Areas where more Millennials can afford homes are likely to see increased demand, the group predicts, especially for entry-level and starter homes.
