If you’re thinking about buying a house in 2025, you’re likely hoping for some kind of relief to make the purchase feel a bit easier on your bank account. Eighty-three percent of U.S. adults who don’t own a home but want to point to issues with money — primarily not having enough income, home prices being too high and/or not being able to afford a down payment — as the driving reason for continuing to rent, according to Bankrate’s latest Home Affordability Report.
So, what’s on the horizon? Will mortgage rates that have been hovering in the 6.5 to 7 percent range begin to fall? Will home prices drop, too? Read on to learn about what’s in store for the housing market and what might make buying a home a bit easier.
Home prices vs. mortgage rates — which one matters more?
When comparing home prices and mortgage rates, it’s easy to focus on the listing amount since that’s the number you see first. However, the mortgage rate you lock in ultimately matters more since you could be paying off the loan for the next 30 years.
Let’s look at some math based on the median price of a home in the U.S. — $422,400 in July 2025, according to the National Association of Realtors.
| Home price | Down payment | Interest rate | Monthly payment |
| $422,400 | $84,480 | 6.5 | $2,135.88 |
| $422,400 | $84,480 | 6 | $2,026 |
| $418,176 | $83,635 | 6.5 | $2,114.53 |
| Monthly payment calculations are based on a 30-year fixed-rate mortgage and only include principal and interest. | |||
In the example above, buying a house with a mortgage rate that is one-half point lower translates to a monthly payment that is $109 lower. Meanwhile, a 1 percent decrease in the price of the home ($4,224) only saves around $21 per month.
Now, let’s look at a more dramatic decrease in both rates and prices:
| Home price | Down payment | Interest rate | Monthly payment |
| $400,000 | $80,000 | 6.5 | $2,022.62 |
| $422,400 | $84,480 | 5.5 | $1,918.67 |
Even if the median price of a home dropped by more than 5 percent, the monthly payment would still be over $100 more expensive compared to buying at the current median price with a mortgage rate that’s a full percentage point lower.
Are rates going to drop?
The good news: Mortgage rates have already fallen. Bankrate’s mortgage rate data shows that, after starting the year above the 7 percent mark, 30-year mortgage rate averages were closer to 6.64 percent in August. The better news: They’ll likely fall even further.
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This article originally appeared here and was republished with permission.
