- Home prices will rise slightly in 2025, according to Realtor.com's housing-market forecast.
- Researchers expect mortgage rates to come down next year but still remain above 6%.
- There's a silver lining: Increased inventory and new construction may offer buyers some relief.
The housing market in 2024 hasn't been kind to those looking for a home: The typical first-time homebuyer age increased by three years, mortgage rates stayed firmly above 6%, and some people felt it would be more affordable to keep renting than buy.
Realtor.com's housing forecast predicts more of the same for 2025.
Danielle Hale, the chief economist at the real-estate listings and data site, said that a "Trump bump" may affect the housing market, but it will take time to determine how.
"For now, we expect a gradual improvement in housing market dynamics powered by broader economic factors. The new administration's policies have the potential to enhance or hamper the housing recovery, and the details will matter," Hale said in the forecast.
Most consumers care about what may happen to home prices and mortgage rates, which directly affect their ability to buy a house.
Here are five predictions on the housing market from Realtor.com.
1. Home prices increase slightly
According to the Federal Reserve Bank of St. Louis (FRED), home sale prices nationwide have increased 32% since 2019, and buyers are looking for some relief — which might not come in 2025.
The median home price in the US was $420,400 in the third quarter of 2024, compared to a slightly higher $435,400 a year earlier, FRED found.
Realtor.com predicts a 3.7% increase in home prices in 2025, which is about a $15,000 increase from the current median sales price.
Home prices often drive economic trends. Higher home prices may cause buyers to expand their house-hunts to more affordable parts of their states or the country, like the South.
2. Mortgage rates stay above 6%
Thirty-year mortgage rates have seen a small dip since last year, from 7.22% in late November 2023 to 6.81% during the same time this year, according to FRED.
Rates dropped to historically low numbers in 2021, when they started the year at 2.65% — and mostly climbed ever since.
The Fed's two rate cuts — a 25-basis-point interest-rate cut after a 50-basis-point cut in September — have yet to affect mortgage rates significantly
In 2025, Realtor.com researchers don't expect mortgage interest rates to drop dramatically, projecting they'll stay above the 6% threshold.
However, Realtor.com anticipates that the number will be closer to 6.2% by the end of 2025 — a slight decrease from the current 6.81%.
3. Rents stay roughly the same
Rent prices are expected to drop by 0.1% nationwide.
For some, that may not be enough of a move to make a serious life change, like going from renting to buying.
Construction trends suggest that rental stock should increase in all parts of the country, but especially in the South, Realtor.com said. New homes and apartments in the South could lead to lower rents in some cities and states.
4. More new homes coming in 2025
Home starts for new single-family homes are expected to grow by 13.8% in 2025, reaching 1.1 million new homes starting construction — the most since 2006, according to Realtor.com.
Property prices may not change significantly, but more new-construction homes on the market could give prospective buyers more chances to score a home.
"While more inventory means buyers will likely have more time to make purchase decisions in 2025, in any market, a fast-acting buyer will have a higher likelihood of making the winning offer," Hale said.
5. There will be more homes for sale next year
In some markets, baby boomers holding onto their homes have given younger buyers fewer options to choose from.
Realtor.com said for-sale inventory in 2025 — meaning the number of actively listed homes, which includes both newly-built properties and resales — is expected to increase by 11.7%.
The double-digit increase will bring on the highest for-sale inventory since December 2019, the forecast said.
While the housing market overall may still favor sellers, more homes for sale can help buyers secure better deals and more concessions.