Find out what are the predictions for the US housing market in 2025, according to experts!
As the housing market continues to evolve, 2025 is shaping up to bring significant trends influenced by economic conditions, supply-demand dynamics, and demographic shifts. Below are five key predictions for the housing market in 2025, based on expert insights and data:
1- Home Price Growth Will Normalize
Economists at Redfin predict home prices in 2025 will grow by around 4%, mirroring trends seen in late 2024. This rate represents a return to pre-pandemic growth levels, compared to the rapid surges experienced in 2020.
However, LendingTree’s Jacob Channel warns that certain economic policies, such as tariffs or reduced home-building activity, could drive prices up if construction costs rise or supply remains tight.
2 – Rents May Stabilize
In 2025, median rent prices are expected to remain stable, supported by an increase in rental inventory, according to Redfin. This stability, combined with rising wages, could improve renters’ financial flexibility, allowing for more savings.
A flat rental market may also empower renters to negotiate better deals with landlords. Concessions like free parking or waived fees are already being observed in some areas.
However, economists caution that if high home prices and mortgage rates push potential buyers back into the rental market, competition for rentals could increase.
3 – Not So Stable Mortgage Rates
Mortgage rates are projected to average 6.8% in 2025, according to Redfin, but experts warn the year could bring volatility. If economic policies such as tax cuts or tariffs lead to inflation, borrowing costs might spike. On top of that, fluctuations seen after the 2024 election indicate rates could shift unexpectedly.
4 – Home Sales Expected to Increase
With many buyers and sellers delaying transactions in recent years, pent-up demand may lead to more home sales in 2025. Redfin estimates around 4 million homes will be sold by the end of 2025, marking an annual increase of 2% to 9%.
While more buyers are expected to enter the market, competition is unlikely to reach the frenzied levels of past years. Rising insurance premiums and property taxes could temper buyer activity, according to CoreLogic’s Hepp.
5 – Climate Risks Will Influence Home Prices
The growing impact of natural disasters is expected to weigh on home prices, particularly in high-risk areas like Florida, California, and parts of Texas. Homes in these regions face challenges such as expensive insurance, higher maintenance costs, and vulnerability to events like hurricanes and wildfires.
Redfin notes that even areas not traditionally considered high-risk are becoming susceptible due to changing weather patterns, such as flooding in parts of California or hurricane damage in North Carolina. As a result, buyers should consider additional costs for insurance and repairs.
What This Means for You
- Buyers: if you’re thinking about buying a home in 2025, be prepared to act quickly when you find a property that meets your needs. You may also want to consider getting pre-approved for a mortgage so that you can make a competitive offer.
- Sellers: if you’re thinking about selling your home in 2025, you may want to list it early in the year to take advantage of the higher buyer demand that typically occurs during the spring and summer months.