The housing market has been volatile over the past few years, driven by inflation, mortgage rates, and economic and political uncertainty.
Unfavorable conditions and widespread uncertainty make home buyers alert to entering the housing market, driving demand downturns and further limiting recovery and growth.
While the initial forecast for 2025 looks promising, lower mortgage rates and housing market growth seem to be very moderate in the coming year.
Don’t miss this move: Subscribe to TheStreet’s free daily newsletter
However, these modest improvements are welcome changes for buyers who treat uncertain prices and house prices.
Mortgage rates have finally dropped for several consecutive weeks, the first time since September. Many experts predict that rates will slowly drop to 6.5% this year, but not sooner.
JP Morgan recently released a forecast for the housing market in 2025, with the results likely to provide some relief to buyers and sellers.
shutter
JP Morgan predicts growth in housing market despite suppression of demand
Sticky mortgage rates, limited housing supply, and soft buyer demand for challenging market conditions drive an ongoing housing market stalemate. However, these factors are rigged with each other, so mortgage rates are significantly lower or housing inventory increases significantly, thus allowing the stimulus market to shift.
With mortgage rates expected to remain above 6% by 2026, housing experts now stress the need to balance housing inventory with buyers’ needs to reduce competition and increase home sales.
JP Morgan’s 2025 housing market outlook is expected to see a 3% growth this year and a rise in housing supply. However, these modest improvements remain below historical levels, indicating that the market still has a long way to go before it is fully stable.
The number of existing homes has increased by 20% year-on-year and will continue to grow in 2025, but remains below the former cycle level.
Housing prices hit record highs, mortgage rates have remained highs for two decades, while soaring consumer prices have left home buyers less money and spend less money on financial milestones like buying homes .
More information about buying a home:
- Dave Ramsey
- Housing experts reveal surprising ways to lower mortgage rates
- Americans buying a home may see significant housing cost changes in 2025
- Financial veteran warns Americans to buy homes now
John Sim, head of securitization products research at JP Morgan, noted that lower mortgage rates are the most direct way to improve housing conditions, but forecasts that rates will only drop to 6.7% this year.
By creating unbearable mortgage payments and making it impossible for sellers to put homes on the market, as most people are locked in more competitive rates, mortgage rates will be locked in first-time home buyers from the housing market.
“Things will not change until we restore the mortgage rate to 5% or even lower,” Sim said. “More than 80% of borrowers are 100 basis points (bps) or more currencies. These are borrowers, and they have There are big obstacles to selling homes, which are creating supply.”
JP Morgan highlights federal policy will impact housing market
The Trump administration is committed to making comprehensive cuts to federal departments and plans and issuing multiple executive orders.
Recently, newly appointed Treasury Secretary Scott Bessent reiterated the White House’s commitment to lower mortgage rates and will focus on lowering fiscal yields for 10 years.
Related: Warren Buffett’s Berkshire Hathaway
Although this approach is a pragmatic way to organically lower mortgage rates, federal legislation such as immigration policies and trade tariffs affect economic growth, investor confidence and the labor market, which shape treasury yields, thus Can affect mortgage interest rates.
“By reducing immigration and reducing demand, Trump believes that housing costs can be reduced,” Sim explained. “However, it’s not that simple – about 30% of construction workers are immigrants, so reducing immigration will mean reducing construction industry labour supply, which could exacerbate the lack of affordable housing.”
Another initiative is strongly supported by billionaire hedge fund investor Bill Ackman, who is privatizing federally-funded housing groups Fannie Mae and Freddie Mac. However, JP Morgan analysts stressed that the plan is likely to increase mortgage rates for consumers, which could derail the government’s housing market targets.
Currently, housing market experts predict a moderate relief for home buyers, but the market is not expected to change much this year until federal housing policies become more clear.
Related: Senior Fund Manager Issues Dire S&P 500 Warnings 2025
