Summary:
- Mortgage rates are expected to stay between 6.5 percent and 7 percent through 2025.
- Berkshire Hathaway forecasts meaningful relief no earlier than 2026.
- Only 1 in 5 listings are affordable to households earning $75,000.
MORTGAGE RATES ARE unlikely to fall significantly this year, but Berkshire Hathaway HomeServices expects modest improvement by the end of the year and meaningful relief in 2026. The firm’s fourth quarter real estate market forecast points to continued high rates, rising prices, and a shortage of affordable housing keeping the market gridlocked.
According to Berkshire Hathaway’s “U.S. Real Estate Market Forecast for Q4, 2025,” after the Covid-era housing boom ended in 2022 rates have remained high. Combined with surging home prices, the result has been a slowdown in home sales and fewer listings, as both buyers and sellers wait for better conditions.
Home mortgage trends can indirectly affect hotel mortgages by shaping interest rates, lending behavior and economic conditions, according to CRECalculator. Higher home mortgage rates and tighter lending can push commercial loan rates up and make banks more cautious with hotel financing. Slower housing markets and reduced consumer income can lower hotel revenue and occupancy, affecting lenders’ risk assessments.
Berkshire Hathaway HomeServices projects mortgage rates will hover between 6.5 percent and 7 percent through the end of 2025, despite earlier expectations of a drop toward 6 percent. While prices are not expected to fall dramatically, they may rise at a slower pace, and slightly lower rates could encourage some buyers back into the market if sellers list homes to avoid potential price corrections.
A shortage of affordable housing remains one of the most pressing issues. According to the National Association of Realtors, in the first quarter, only 20 percent of listings were affordable to households earning $75,000 — down from 50 percent before the pandemic. The U.S. would need to add more than 400,000 listings priced at $255,000 or below to restore affordability, and even that may not be enough.
There are signs of improvement: Redfin data for May showed sellers outnumbering buyers by nearly 500,000, indicating sustained inventory growth. However, any downward pressure on prices is likely to be uneven across the country.
With tariffs driving up building material costs, expanding the stock of affordable homes will be challenging. Berkshire Hathaway warns that without substantial growth in mid-range housing supply, especially for first-time and lower-income buyers, the affordability crisis will persist well into 2026.
Recently, Forbes reported that mortgage interest rates peaked at 7.04 percent in January, dropped to the mid-6 percent range in March and stayed between 6.75 and 6.9 percent since May.
