Mortgage Rates, Inventory, Prices & Why St. Louis is One of Zillow’s Hottest Markets
The housing market in 2025 is off to a dynamic start — and if you’re buying or selling a home in St. Louis, there’s plenty you need to know.
From mortgage interest rates and home affordability to inventory and pricing, we’re breaking down the latest housing market trends — including why Zillow named St. Louis one of the top 10 hottest housing markets in the country.
Will Mortgage Rates Fall in 2025?
According to updated forecasts from Fannie Mae, 30-year fixed mortgage rates are expected to decline from 6.8% in early 2025 to around 6.3% by the end of the year. While this drop is modest — about three-tenths of a percentage point — it may offer some relief to buyers who’ve been holding off due to higher borrowing costs. Midwest BankCentre’s Chief Community and Economic Development Officer, Wes Burns, shared “I think now is a great time to reach out to a real estate agent or connect with a loan officer to obtain a pre-qualification.”
What Does the Fed’s Interest Rate Policy Mean for Affordability?
The Federal Reserve has kept interest rates steady in the first part of 2025, despite earlier expectations of one or two cuts. Some economists now project three or even four possible rate cuts by year’s end, depending on inflation and job market data. However, even if those cuts materialize, they are likely to be gradual — totaling about half a percentage point in reductions. In sum, affordability will remain tight for now, but any downward movement in rates helps. Don’t wait for a major drop — prepare and get pre-qualified early so you’re ready to move when the timing is right.
Is Inventory Going to Improve?
Inventory in the St. Louis metro area remains below pre-pandemic levels, but there are signs of improvement. According to St. Louis Real Estate News, new listings are slowly increasing, especially as homeowners adjust to the “new normal” of higher interest rates. That said, if rates fall, more buyers are likely to re-enter the market, which means homes may sell quickly — keeping inventory tight overall. Today, homes in the St. Louis market are already going under contract in as little as 12 days, highlighting the competitive nature of today’s market.
Are Home Prices Still Rising in St. Louis?
Yes — but at a more moderate pace than during the height of the pandemic market. Nationally, CoreLogic forecasts a 4.1% increase in home prices through the end of 2025. Locally, St. Louis City has seen a 4.76% year-over-year increase in median home prices from March 2024 to March 2025. So, while prices are still rising, but buyers may have a bit more negotiating power — especially in neighborhoods with more inventory.
Will 2025 Be a Buyer’s Market or Seller’s Market?
It’s looking like 2025 will bring a more balanced housing market, with characteristics of both a buyer’s and seller’s market.
- For Sellers: Low inventory means homes are still in demand and selling fast.
- For Buyers: Price increases are slowing, and rate relief may be on the horizon.
Market conditions may vary widely depending on your neighborhood and price point. Connect with a local expert to understand what’s happening where you want to buy or sell.
Why St. Louis is One of Zillow’s Hottest Housing Markets in 2025
Zillow recently ranked St. Louis #6 on its list of Hottest Housing Markets in the U.S. for 2025. Wes Burns shared that, “St. Louis is heating up — a mix of affordability, economic strength, and tight inventory is drawing both buyers and investors.” The Zillow ranking was primarily driven by:
- Strong Job Growth: Employment is rising, and job creation is outpacing home construction.
- Affordability: With typical home values around $256,958, St. Louis remains one of the most affordable major metros.
- Fast-Moving Homes: Properties are selling in under two weeks, signaling high demand.
Final Thoughts
Whether you’re a first-time buyer, a current homeowner considering listing, or simply trying to make sense of the market, 2025 is shaping up to be a pivotal year for real estate in St. Louis.
At Midwest BankCentre, our mortgage bankers are always working In Your Best Interest and are here to guide you every step of the way — from understanding rates to navigating offers in a competitive market. Contact one of our trusted mortgage bankers or stop by your local branch. Because when it comes to homeownership, It Matters Where You Bank.
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