How Will Recent Policy Changes Impact the Housing Market?
Source: Economics Group of Wells Fargo Bank, N.A.
Summary
Housing Market Outlook Key Takeaways
- Housing activity entered 2025 with modest momentum, reflecting slightly lower mortgage rates in the second half of last year. Although improved, home sales are still running at a weak pace.
- Material relief in terms of housing affordability does not appear to be on the horizon amid elevated mortgage rates, rising home prices and increased home insurance premiums.
- Although lower in recent weeks, mortgage rates currently sit at 6.7%, roughly on par with buyer financing costs one year ago. Mortgage rates will likely ease further, but only modestly. We currently expect average 30-year mortgage rates to end 2025 at 6.4%.
- Some easing in terms of financing costs and tight inventory conditions should help support a modest improvement in home sales in the years ahead. That said, the pace of existing home sales is likely to remain fairly tepid this year.