The real estate market is poised for a significant rebound in 2025, according to leading economists who shared insights during the National Association of REALTORS® (NAR) Real Estate Forecast Summit. Predictions include stronger home sales, moderating but steadily increasing home prices, more inventory availability, and stabilizing mortgage rates.
What to Expect in 2025: Key Highlights
- Home Sales Rebound: Existing-home sales are forecasted to rise by 7% to 12%, while new home sales could see an 11% increase.
- Mortgage Rates Decline: Rates are expected to hover around 6%, a level more favorable for buyers compared to recent years.
- Home Prices: Median home prices will likely increase by 2%, reaching $410,700 in 2025, with another 2% growth anticipated in 2026.
- Inventory Growth: Housing inventory is projected to climb as more homeowners and builders list properties for sale.
Economists suggest these factors could help ease affordability challenges and provide greater opportunities for both buyers and sellers.
The "New Normal" for Mortgage Rates
Mortgage rates, which reached multi-decade highs above 7%, are forecasted to stabilize around 6%. This marks a shift in buyer sentiment, with fewer homeowners waiting for the ultra-low rates of the past. “By historical standards, 6% is still below the long-term average of 7%,” said Lawrence Yun, NAR’s chief economist.
Increasing Inventory Benefits Buyers and Sellers
The housing market is projected to see a notable rise in listings, driven by stabilizing rates and new-home construction. Builder activity is ramping up, with an emphasis on affordable options like townhomes and suburban developments.
“Growing inventory will create a more balanced market, benefiting both buyers and sellers,” said Danielle Hale, chief economist for realtor.com®. The increase in inventory could enable more transactions as motivated sellers often transition into buyers themselves.
First-Time Buyers and Affordability Challenges
First-time buyers continue to face hurdles, with their market share falling to a record low of 24% in 2024. However, moderating price growth and increased inventory may marginally improve affordability in 2025. NAR research shows that a 6% mortgage rate could make homeownership accessible to 6.2 million more prospective buyers.
Housing Equity and All-Cash Purchases
With record-high home equity, many repeat buyers are leveraging their gains to make all-cash purchases. This trend has pushed cash sales to 26% of the 2024 market. Median net worth for homeowners is projected to surge to $415,000 in 2024, significantly outpacing the $10,000 median net worth of renters.
Optimism for Spring 2025
Economists are optimistic about a strong housing market in 2025, with robust inventory growth and stabilizing mortgage rates paving the way. “All the factors are lining up for a rebound in spring,” said Michael Frantantoni, chief economist at the Mortgage Bankers Association.
Why It Matters
If you’re considering buying or selling a home, 2025 offers promising opportunities. With improving affordability, more inventory, and stabilizing rates, now may be the perfect time to prepare for a successful transaction.
Source: Nar.realtor
