Can you believe we’re already halfway through 2025?

As we head into the second half of the year, a lot of buyers and sellers are asking the same thing: What’s next for the housing market?

While no forecast is guaranteed, economists from Fannie Mae, Zillow, NAR, MBA, and others have released updated projections on everything from home prices and mortgage rates to sales activity and market recovery.

In this post, we’ve rounded up the key takeaways from their mid-year outlooks—and added a breakdown of what they could mean for our local market here in the DMV and the Eastern Panhandle. 

Home Price Forecasts

Most housing economists agree: prices will rise, but not by much. And depending on where you live, they could even decline.

Home price forecasts for 2025:

  • Cotality: +4.3% from April 2025 to April 2026
  • Fannie Mae: +4.1% in 2025
  • Home Price Expectations Survey (HPES): +3.3%
  • NAR: +3% in 2025, +4% in 2026
  • MBA: +1.3% in 2025, <1% in 2026
  • Zillow: -1.4%, an improvement from its earlier prediction of -1.9%

Notably, some overheated markets like Florida, Texas, Hawaii, and Washington D.C. are seeing declines. 

Meanwhile, more affordable areas in the Midwest and Northeast are holding strong, especially suburbs near expensive cities.

In our neck of the woods, prices continue to rise year over year in both Northern Virginia and the Eastern Panhandle. However, rising home prices don’t automatically mean we’re in a seller’s market—today’s buyers are more selective, and overpriced homes are sitting longer or requiring price cuts. Strategic pricing is key; even in an appreciating market, listing too high can backfire fast.

Existing Home Sales Outlook

Sales activity is expected to grow this year, but recovery will be gradual.

Forecasts for existing home sales in 2025:

  • NAR: +6% (with an 11% gain expected in 2026)
  • Fannie Mae: +4.4% (4.24 million home sales)
  • MBA: 4.3 million home sales
  • Zillow: +1.4% (4.12 million home sales)

Improving inventory and gradual rate relief are creating more movement in many markets. 

In both Northern Virginia and the Eastern Panhandle, inventory is rising—Northern Virginia saw a 63% year-over-year increase in active listings, while the Eastern Panhandle jumped nearly 90% month-over-month. Despite more homes on the market, buyer activity remains strong: Northern Virginia’s pending sales are up nearly 10%, and homes are selling in about 15 days; in the Eastern Panhandle, homes are moving faster and often at full price. The takeaway? Even with more options for buyers, pricing your home right is crucial—overpriced homes risk sitting while well-priced ones still move quickly.

Mortgage Rate Predictions

If you’re waiting for mortgage rates to drop below 5%, you’ll likely be waiting a while. But slow, steady improvement is expected.

2025 mortgage rate forecasts:

  • MBA: 6.6% average in Q4 2025; down to 6.3% by end of 2026
  • NAR: 6.4% in late 2025; 6.1% in 2026
  • Fannie Mae: 6.1% by year-end; 5.8% in 2026

Lawrence Yun, NAR’s Chief Economist, calls mortgage rates the “magic bullet” for unlocking market momentum. Lower rates could encourage more buyers, especially first-timers, back into the market.

When the right home comes along, being prepared to act can make all the difference—especially in a competitive market. While interest rates might go up or down in the future, that’s something no one can perfectly predict. What matters most is feeling confident and comfortable with your monthly mortgage payment now, based on your current budget and goals. Timing the market is tough, but being ready means you’re in control when the right opportunity appears.

What This Means for You

Here’s the bottom line for buyers, sellers, and homeowners in today’s market. 

Recovery is happening, but slowly. Most forecasts point to modest gains in both home prices and sales volume through the rest of 2025, with more growth expected in 2026.

Mortgage rates are likely to stay above 6%, which means realistic budgeting will remain essential for anyone looking to purchase.

But it’s important to remember that national trends only tell part of the story. Every local market behaves differently, and what’s happening in one region may not apply in another. Even different price points within the same market can experience completely different dynamics!

If you’re curious about how these trends are playing out in Northern Virginia or the Eastern Panhandle, let’s talk. We’re happy to break down what’s happening and how it could impact your plans to buy or sell.

Source: BAM

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