Real Estate Market Predictions for 2025

Are you curious about real estate predictions for 2025? Continue reading to discover more about market forecasts and what to expect this year.

The last couple of years have been challenging for those in the real estate market, but signs suggest that the worst may be behind us, according to the National Association of Realtors chief economist. Looking ahead to 2025 and 2026, forecasts indicate an increase in home sales and a stabilization of mortgage rates.

Predicting the future can be difficult, especially when it comes to real estate, and housing experts don't always get it right. Nevertheless, it's important to consider industry insights to gain a better understanding of what the coming year may hold for the housing market.

The outlook for the housing market 2025 appears more favorable, owing to improving mortgage rates and inventory levels. While uncertainty remains, several factors may positively impact this year's real estate sector.

If you're interested in where these trends might lead, continue reading to learn more about the predictions for the 2025 housing market and the various influences at play, ensuring you stay informed.

Here are the real estate market predictions for 2025. 

1. Home Sales Rise

The job market is thriving, and the stock market is also performing well, prompting more Americans to consider entering the housing market. Predictions suggest that job growth will increase in 2025, which could significantly impact housing demand.

The housing market has faced challenges in the past two years. However, recent signs indicate that the worst might be behind us. The inventory of both new and existing homes is on the rise, and population growth signals an increasing demand for housing.

According to the economist of the NAR, here is the forecast to expect in the next couple of years:

• 2025 Sales: Existing home sales to rise 9% year-over-year; new home sales to jump by 11%
• 2026 Sales: Existing home sales to rise 13% year-over-year; new home sales to jump by 8%

As we enter the new year, home sales are projected to improve due to economic recovery and favorable job opportunities. Monitoring the economy and the job outlook is essential to staying up to date on home sales in 2025. 

2. Mortgage Rates Moderating

The mortgage landscape has presented some noteworthy challenges in recent years. According to Freddie Mac, the average 30-year fixed mortgage rate has varied between 6.08% and 7.44%. However, encouraging data indicates that we can expect rates to stabilize towards the lower end of this range by 2025.

In a recent update, the Federal Reserve announced its second rate cut of the year, reducing its short-term benchmark rate by a quarter-point. Many analysts predict that additional cuts, possibly up to four, may occur over the next year, which is certainly a positive development to watch.

That said, it's important to recognize that substantial changes in mortgage rates might not come immediately, particularly due to the large budget deficit that limits available mortgage funds. However, potential shifts are on the horizon; for instance, a reduction in the budget could result in more relaxed housing regulations and possibly prompt more significant drops in mortgage rates.

Understanding the various factors that influence mortgage rates is essential. If you are considering buying a home, staying informed and monitoring market changes will empower you in your journey toward homeownership.

3. Home Price Increase

Homeowners have experienced significant gains in housing wealth, averaging around $147,000 over the past five years. However, home buyers continue to face challenges with affordability. As a result, the gap in median net worth between homeowners and renters is widening. 

Several factors can influence sharp price increases. According to a report by the National Association of Realtors (NAR), an increase in housing supply could help align home price growth more closely with wage increases, preventing outrageous price hikes. The current forecast suggests:

• 2025 Median Home Price: $410,700, up 2%
• 2026 Median Home Price: $420,000, up 2%

Home prices depend on many factors. One factor to keep in mind is that not enough homes are being constructed in the U.S. to keep up with housing demand, which is bound to drive the price up. When you are looking at home prices this year, it is important to keep an eye out for inventory and the economy. 

4. New Buyers Emerge

We are witnessing some fascinating demographic shifts as we welcome a new wave of home buyers into the market. Recent reports highlight that many buyers are choosing to forgo traditional mortgages, while first-time home buyers are generally older than before. Additionally, we are seeing a trend of individuals returning to urban centers, along with collaborative purchasing among friends and family. Notably, single women are leading the way in home purchases, surpassing their male counterparts.

The National Association of Realtors' 2024 Homebuyers and Sellers Report indicates that buyers have become older and wealthier over the past year, with the median age now at 56—an increase of seven years. As our society evolves, so too does the housing market. Looking ahead to the new year, we are excited to witness the emerging trends as people begin to engage with the market once more.

5. Buyer or Seller Market?

The housing market improved for buyers in 2024, but it is expected to remain a seller's market in most areas throughout 2025. The good news is that inventories and demand are predicted to balance better this year.

While most areas will still favor sellers due to limited inventory, some markets have seen an increase in available homes, which may lead them to shift toward a buyer's market. These areas could also be more vulnerable to price declines.

It's essential to monitor the housing market in your area to better understand your specific situation. Knowing whether you are in a seller's market or a buyer's market is crucial if you are considering buying or selling this year.

6. Inventory?

The housing inventory is increasing, but the rise has been slow. Mortgage rates are unlikely to decrease significantly enough to boost the existing home inventory. However, we can expect to see new inventory from newly constructed homes in 2025.

The National Association of Home Builders (NAHB) conducts a monthly survey of builders to gauge the Housing Market Index. According to this data, over half of the builders surveyed have a positive outlook for new home sales this year. 

Despite ongoing issues with housing affordability, builders are feeling more optimistic about market conditions in the coming year. If you're considering new construction homes, exploring your options this year might be a good idea.

7. Buyer Trends

As we head into 2024, home buyers are becoming more flexible in their searches. Previously, buyers were focused on specific areas, but many are now expanding their search locations due to low inventory. 

Home buyers who once preferred move-in ready properties are now considering homes that require improvements if they are located in desirable areas. For sellers, understanding buyer trends as we approach 2025 will be crucial. Staying informed about what potential buyers want will assist you in successfully selling your home.

8. Home Trends

Home trends can vary greatly from year to year and from person to person. Some popular trends in the past are now losing their appeal. Staying updated on home trends is essential for both home sellers and buyers. 

Everyone has unique preferences when it comes to their ideal home, but understanding which features are in high demand can help you understand the competition and provide you with an advantage. It's a good idea to consult with a real estate agent who can inform you about the trends expected in 2025, which is valuable information whether you're buying or selling a home.

9. Advice to Buyers and Sellers

Several essential factors must be considered if you are a buyer or seller in the housing market. It is highly recommended to work with a trustworthy professional. If you plan to buy or sell in 2025, teaming up with an experienced agent is essential.

While there will never be a perfect time to buy or sell a home, certain periods may be more favorable for your situation. Understanding the real estate landscape and staying updated on current trends can significantly influence your decision-making process.

Be informed about the market, the location you are interested in, your budget, and the overall economy. There are many aspects involved in buying and selling a home, so if you have been contemplating this process, seek guidance from a professional who can cater to your specific needs.

10. 2025 Predictions Overview

Here is an insightful overview of the year-end outlook and future trends in the housing market. Fortunately, a recession is no longer anticipated. While we expect a moderation in economic growth from the robust rates seen in prior years, the outlook remains encouraging.

Below are some key figures that will enhance your understanding of these positive developments.

Category	2023	2024	Change	2025 Prediction	2024-2025 Change
NAR Year-End Median Existing Home Sales Price	$390k	$405k	3.9%	$420k	3.7%
New Single Family Home Sales	666	700	5.1%	750	7.1%
Home Median Rent	$1,940	$2,005	3.4%	$2,075	3.5%
30-Year Fixed Rate Mortgage Rate	6.81%	6.65%	-16 Basis Points	6.30%	-35 Basis Points

Methodology

We created this guide using information from various sources and our own data on the 2025 real estate market predictions.  

• National Association of Realtors
• U.S. News
• Bankrate

We used the following sources to gather most of our information on the market predictions and what to expect this year. 

FAQS

Should I buy a house in 2025 or wait?

With continued rising home prices and tight supply, 2025 could still be difficult to predict. However, if rates go down, it would make housing more affordable and let owners finally sell, which would help the inventory. 

Will mortgage rates drop in 2025?

Rates are expected to rise in 2025, but there is no expectation of a return to the 3% mortgages. There will most likely be a decline throughout the year. 

Where will mortgage rates be in 5 years?

Over the past year, the average fixed mortgage rate has fluctuated between 6.5% and 7.5%. Most economists had expected mortgage rates to drop to 6% by the end of 2024 and to 5% in mid-2025. However, these are just predictions, so keep that in mind.  

Will there be a housing recession in 2025?

No - expects. Do not expect a housing market crash in this year. We have more strict lending standards, and the housing market will not likely enter a recession with low inventory and high demand continuing. 

Real Estate Market Predictions for 2025 - The Bottom Line

The housing market in the United States has experienced a standstill over the past year, but predictions indicate that 2025 will bring relief for both buyers and sellers. 

As 2024 came to a close, the market experienced the strongest seasonal slump since 2023. Homes lingered on the market for about 70 days, making December the slowest festive season in five years. However, as we transition from 2024 to 2025, positive signs are emerging for the housing market. 

Navigating the housing market can be challenging and confusing. It may be wise to seek guidance from an experienced local real estate agent in 2025 to stay informed about the current conditions.

If you are considering moving or selling, contact us or visit our website. Our team at Raleigh Realty is here to help you with any home buying or selling needs.