What To Expect from Mortgage Rates and Home Prices in 2025
What To Expect from Mortgage Rates and Home Prices in 2025 for Chattanooga, Tennessee and Surrounding Areas
Curious about where the housing market is headed in 2025, especially in Chattanooga, Tennessee, and the surrounding areas? The good news is that experts are offering some promising forecasts, especially when it comes to two key factors that directly affect your decisions: mortgage rates and home prices. Whether you're considering buying or selling in Chattanooga or nearby regions like Ooltewah, Hixson, or North Georgia, here’s a look at what the experts are saying and how it might impact your move.
Mortgage Rates Are Forecast To Come Down
One of the biggest factors likely affecting your plans is mortgage rates, and the forecast looks positive. After rising dramatically in recent years, experts project rates will ease slightly throughout the course of 2025 (see graph below).
While that decline won’t be a straight line down, the overall trend should continue over the next year. Expect a few bumps along the way because the trajectory of rates will depend on new economic data and inflation numbers as they’re released. But don’t get too hung up on those blips and reactions from the market as they happen. Focus on the bigger picture.
Lower mortgage rates mean improving affordability, which is excellent news for homebuyers in Chattanooga and surrounding communities. As rates come down, your monthly mortgage payment decreases, giving you more flexibility in what you can afford if you buy a home here.
This shift will likely bring more buyers and sellers back into the market. As Charlie Dougherty, Director and Senior Economist at Wells Fargo, explains:
“Lower financing costs will likely boost demand by pulling affordability-crunched buyers off of the sidelines.”
In markets like Chattanooga, where affordability has been a concern for some buyers, this change could make a significant difference. As demand increases, both inventory and competition among buyers will ramp back up. The takeaway? You can get ahead of that competition now. Lean on your agent at Lawrence Team Homes to make sure you understand how the shifts in rates are impacting demand in your area.
Home Price Projections Show Modest Growth
While mortgage rates are expected to come down slightly, home prices are forecast to rise—but at a much more moderate pace than in recent years. Experts are saying home prices will grow by an average of about 2.5% nationally in 2025 (see graph below), and that trend is likely to be reflected in Chattanooga and its neighboring communities.
This is far more manageable than the rapid price increases we’ve seen in previous years, which saw double-digit percentage growth in some markets, including parts of Tennessee.
What’s behind this ongoing increase in prices? Again, it has to do with demand. As more buyers return to the market, demand will rise – but so will supply as sellers feel less rate-locked.
More buyers in markets like Chattanooga, which has seen a growing demand from both locals and out-of-state buyers, will put upward pressure on prices. However, with more homes likely to be listed, supply will help keep price growth in check. This means that while prices will rise, they’ll do so at a healthier, more sustainable pace, making 2025 a potentially great time to enter or re-enter the market.
Of course, these national trends may not reflect exactly what’s happening in your local market. Some areas in and around Chattanooga might see faster price growth, while others could see slower gains. As Lance Lambert, Co-Founder of ResiClub, says:
“Even if the average national home price forecast for 2025 is correct, it’s possible that some regional housing markets could see mild home price declines, while some markets could still see elevated appreciation. That has been, after all, the case this year.”
Even the few markets that may see flat or slightly lower prices in 2025 have had so much appreciation in recent years – it may not have a big impact. That’s why it’s important to work with a local real estate expert who can give you a clear picture of what’s happening where you’re looking to buy or sell.
Bottom Line
With mortgage rates expected to ease and home prices projected to rise at a more moderate pace, 2025 is shaping up to be a more promising year for both buyers and sellers in Chattanooga, Tennessee, and the surrounding areas.
If you have any questions about how these trends might impact your plans in Chattanooga, Ooltewah, Hixson, or North Georgia, let’s connect. The Lawrence Team Homes is here to help you navigate the market and make the most of the opportunities ahead. Whether you're buying your dream home or looking to sell, we'll ensure you're well-prepared for 2025’s housing market trends.
