In January 2024, economists had predicted mortgage rates would be around 4.5-5% by the end of the year, but they ended the year in the upper 6% range. Many expected rates to drop to the 5% range in 2025, but forecasts have now shifted to a range of 5.9% to 6.41% for the end of 2025, with the National Association of Realtors at 5.9%, Fannie Mae at 5.4%, and Wells Fargo at 6.41%.
This change is largely due to the Federal Reserve’s (The Fed) aggressive actions against inflation, which succeeded in lowering costs in many areas. However, a stronger-than-expected labor market, a resilient economy, and persistent core inflation prevented mortgage rates from significantly falling. The Fed had anticipated a cooling labor market by September, but unexpected job growth in the final months of 2024, along with revisions to earlier labor data, suggested inflation was still a serious issue. By the end of the year, core inflation (measured by the PCE) remained above the Fed’s 2% target at 2.8%, pushing mortgage rates higher than originally forecasted. The pressure for higher rates permeated the mortgage market and brought with it rates in the 6’s and low 7s.
With all of this in place, going into 2025, we can expect rates to stay in the 6% range through most of the year. As we move away from the recent past of historically low rates, there is an anticipation of a steady year for real estate and mortgages as buyers and sellers adjust to this new reality.
Now is an ideal time to buy or sell a home due to this unique convergence of market conditions. For buyers, the competition has somewhat subsided, while sellers can take advantage of a continued housing supply shortage which keeps demand high. With mortgage rates showing signs of stabilization, both buyers and sellers can approach the market with greater confidence, knowing they are making decisions in a less volatile environment. For those concerned about higher mortgage rates, a gentle reminder of the possibility of refinancing can ease concerns as those opportunities should arise in the future.
Of the new apartments, South Burlington led with 422 units, followed by Burlington with 287. The rest—totaling 115—were distributed among Colchester, Shelburne, Williston, Milton, Winooski, Charlotte, and Westford. Of further note, 364 of these units were completed by UVM and the UVM Health Network and are not publicly available, rather they helped ease overall market strain by reducing the number of potential students and medical professionals seeking housing options in the broader market.
