Some U.S. consumers are optimistic about the housing market in 2025, believing there's a chance mortgage rates and home prices drop. But how likely is that to really happen?

Higher interest rates add to problems with affordability that have hammered the housing market for the last two years. Prices have continued to climb despite slower sales volume, posting 17

Mortgage rates topped 7% this week, a key psychological threshold, in a sign of the US housing market’s unrelenting affordability challenges.

The average rate on 30-year fixed-rate mortgages surpassed 7 percent for the first time since May, Freddie Mac reported on Thursday, extending a weekslong climb that could push more buyers and sellers to the sidelines.

Mortgage rates are driven by the bond market and Friday was the least active day of the week for bonds.  There were no major economic reports to cause rapid changes in trading levels. As such, mortgage rates started out very close to the levels seen yesterday and most lenders didn't make any mid-day changes.

Mortgage rates rose again for the sixth straight week, with the average 30-year fixed-rate note topping 7% for the first time since May as the housing market continues to struggle.

Higher rates are dimming hopes for a recovery in the sluggish housing market.

"While I'd love to say rates will drop below 6% in 2025, I think it's a moderate probability and not a certainty," says Steven Parangi, a licensed mortgage loan originator and owner of Alpine Mortgage Services. His view aligns with the Mortgage Bankers Association's prediction that rates will stay between 6% and 7% throughout the year.

Mortgage rates are quickly approaching 7% again, after rising each of the first two weeks in January. Nationally, it means the household income now required to afford the typical starter home is $70,164,