What to expect for home prices, sales in 2025
Year-ahead outlooks are always tricky, and housing market experts are not immune from making reasonable forecasts in December that fall apart by the first quarter of the following year.
Still, it’s worth listening to what people in the industry are expecting — particularly when there’s some consensus for what’s likely to happen in 2025. To that end, we’ve rounded up some industry perspectives on several of the issues Americans care most about in the housing market, from rates to sales volumes.
In short, don’t look for boom times next year, but do expect some small improvements in the real estate landscape.
Where will mortgage rates go in 2025?
“Mortgage rates are likely to remain in the high-6% range throughout 2025, with the weekly average rate fluctuating throughout the year but averaging around 6.8%,” say the strategists at Redfin, the national brokerage.
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The panel of experts at Fannie Mae and Pulsenomics, LLC says they expect “mortgage rates to remain elevated but modestly decline over the course of the year to 6.3%.”
Realtor.com forecasts a full-year average of 6.3%
Rates will average 6.4%, according to the Mortgage Bankers Association.
Will home prices rise in 2025?
Redfin expects a 4% rise in the median home-sale price.
The Fannie Mae/Pulsenomics forecast calls for a 3.8% gain.
Zillow forecasts 2.6% home value growth in 2025
The Mortgage Bankers Association expects a gain of just 1.5%.
Read next:Most older Americans want to age in place, new report finds. What are the barriers?
Will home sales rise in 2025?
The Mortgage Bankers Association expects a 5.1% increase next year.
Zillow forecasts a 7% increase.
The economics team at Fannie Mae sees a 4.2% bump.
The National Association of Realtors thinks sales will jump 9%.
More:The housing crisis threatens the American dream. What’s next?
Bonus (random) forecasts
“Mayors in Blue Cities will help reverse the flight from urban centers,” Redfin’s experts think. The group cites newly elected mayors in San Francisco, Portland, Oregon, and others who are enacting pro-business, tough-on-crime policies. “Those political factors, along with many big companies—including tech firms—bringing their workers back into the office, may start a reversal of the flight from big coastal cities.”
Separately, pet-friendly policies will become “nonnegotiable” for managers of rental properties, Zillow’s forecast argues. “Renters are getting older and they are not putting off ‘adulting’ milestones such as moving in together or getting a pet before they buy a home,” they write. Some 58% of renters have a pet, which is up from 46% before the pandemic, and in surveys many say they have passed on a rental property because it did not allow pets.
And “2025 is expected to be the most buyer-friendly market since 2016,” according to the Realtor.com team. Inventory of homes for sale will be at the highest since just before the pandemic, they note.
There will be 4.1 months’ worth of homes for sale on the market in 2025, they reckon, explaining that “anything under 4 months is typically considered a seller’s market, while a supply of 4 to 6 months is typically considered a balanced market.” (Anything above 6 months’ worth is a buyer’s market, which isn’t in the cards any time soon.)
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