2025 may bring more homes but prices will stay high, especially in the white hot Indianapolis market.

Why it matters: Many people will remain locked out of homeownership. 

Here's what experts and industry pros predict is in store for mortgage rates, new builds, moves and more next year.

Rates will remain above 6%

U.S. mortgage rates are expected to be in the low- to mid-6% range at the end of 2025, according to Realtor.com chief economist Danielle Hale.

• Redfin's economists forecast rates to stay higher, near 7%.

Between the lines: "We're not going to see a big change in the affordability picture," Hale tells Axios.

• "It's still going to be challenging to get into the housing market," especially for first-time buyers, she says.

Zoom in: Since homes in the metro area are still relatively affordable, compared to other large cities across the country, Indianapolis' housing market could be especially challenging this year.

• Zillow is predicting the typical home value will to rise to $285,086 and new listing will move fast — with pending sales in about two weeks on average.

More new homes

Chief economist Lawrence Yun at the National Association of Realtors expects more single-family new builds.

• "There is still a housing shortage, and homebuilders are making good profits to continue expansion," he says.

Fewer "locked-in" homeowners

The mortgage "lock-in" effect, which has contributed to the housing market's woes by discouraging homeowners from moving, won't disappear next year — but it will lessen, Hale says.

By the numbers: In mid-2024, 84% of homeowners with a mortgage had a rate under 6%, down from 89% a year earlier, per a Realtor.com analysis.

• Hale expects that share to fall to 75% by the end of 2025, as more people choose to part with their current home loan.

What else experts predict

The average rate on the 30-year-mortgage topped 7% for the first time since May 2024, according to Freddie Mac data out Thursday.

The big picture: That's up from an average rate around 6.7% heading into the holidays and up from around 6% when the Federal Reserve cut interest rates in September.

• The central bank has continued to lower rates, while signaling fewer cuts are coming in 2025.

Lower mortgage rates could exacerbate the country's housing crunch, real estate agent Josh Altman tells Axios.

• That's because "as mortgages become more affordable, more buyers are going to enter the market, creating greater competition and ultimately higher home prices," says Altman, who's also co-founder of Redy, a platform for home sellers and agents.

The bottom line: Mortgage rates hovered mostly between 6% and 7% last year.

Go deeper: Why mortgage rates are climbing

🏈 Notre Dame fought back from a 31-7 deficit but couldn't quite overtake the Ohio State Buckeyes last night in the College Football Playoff National Championship. The Irish lost 34-23. (South Bend Tribune)

🏊‍♀️ Carmel High School, a swimming powerhouse, has opened a new $55 million natatorium. (IndyStar)

🐴 The Colts have hired Lou Anarumo as the team's new defensive coordinator, a position he most recently held with the Cincinnati Bengals. (FOX59)

🏛️ Indiana Gov. Mike Braun was among the hundreds of Hoosiers in Washington, D.C., yesterday for President Trump's inauguration. (WTHR)

If you can't afford a house in your city, what about an investment property somewhere else?

Why it matters: Some people are becoming homeowners while continuing to live in their rental apartments.

How it works: That approach can make sense for renters with extra cash who want to remain in a costly area and start building equity, according to Realtor.com's Hale.

• They could "look for a less-expensive market where their savings might be able to translate into a nice down payment," Hale told CNBC.

Dubbed "rentvesting," the strategy often involves taking on landlord responsibility from afar.

What they're saying

If home improvement projects are on your 2025 to-do list, here are some expert tips to help make achieving your goals a little easier. 

💸 Goal: Improve home value

Pro tip: Spring for a kitchen remodel, which can help sell your home down the line. 

• A good rule of thumb is to budget 15% of your home's value for the renovation. 

🎨 Goal: Low-lift, high-impact change

Pro tip: Paint your walls with saturated jewel tones or soothing nature-inspired hues, if that's your vibe. 

• If you're up for pattern play, try a wallpaper border or cover your bookshelves in personality-packed peel-and-stick.

🪴 Goal: Grow your own food

Pro tip: Start with a small herb garden before diving into homesteading.

• Herbs grow well in most climates and can even grow in a pot indoors.

🧹 Goal: Clear clutter

Pro tip: Put the credit card down (no fancy containers needed) and block out time to make cleaning a priority. Happiness researcher Gretchen Rubin calls it a "loose ends day." 

• You'll feel much better after you purge your closet or recycle those empty Amazon boxes.

☕️ Goal: Add daily luxury

Pro tip: Upgrade your coffee routine. Custom beverage stations are a coveted home feature, according to design pros.

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