The housing market appears to be improving heading into the new year. According to the Mortgage Bankers Association (MBA), mortgage origination volume is projected to grow from $1.79 trillion in 2024 to $2.3 trillion in 2025. Purchase originations are expected to rise by 13% to $1.46 trillion next year, and the number of mortgages is expected to increase by 28%, reaching 6.5 million loans in 2025, compared with 5.1 million in 2024. According to Joel Kan, MBA’s vice president for research and business development, the improvement in purchase activity is largely due to increased housing inventory and lower mortgage rates.
“There has been growth in purchase applications for both new and existing homes, with application levels above last year’s pace. Mortgage rates are lower than they were a year ago, and for-sale inventory has started to grow somewhat, which is helping to ease price pressures in many markets. It is also encouraging that an increasing share of first-time homebuyers have turned to newly built homes as an option, given the lack of previously owned starter homes on the market. These factors should support a bigger gain in purchase activity early next year, especially if mortgage rates remain near these levels or decline further,” Kan said.