Interest rates are one of the most influential factors in the housing market. As we enter March 2025, their impact on home values, buyer affordability, and market activity is more pronounced than ever.
1. Rates Have Stabilized Around 6.5%
Following a year of rate volatility, we’ve reached a relative calm. This stability is allowing buyers to confidently re-enter the market and calculate affordability with more accuracy.
2. The Link Between Rates and Prices
Higher interest rates typically cool price appreciation, and that’s what we’re seeing now. Sellers can no longer rely on skyrocketing values, and buyers have more leverage to negotiate fair prices.
3. Refinance Activity is Down
Most homeowners locked in ultra-low rates during the pandemic. With current rates significantly higher, there’s little incentive to refinance, which contributes to low housing turnover.
4. Long-Term Impact
As rates remain elevated compared to the 2020-2021 period, we’re seeing a “new normal” emerge. Buyers are adapting their expectations, and price growth is becoming more sustainable.
Takeaway
- For buyers: Consider locking in rates now before the next Fed move.
- For sellers: Realistic pricing and flexible negotiation are key in attracting rate-sensitive buyers.