After seeing several changes in the 2024 housing market, with increased demand and rising home prices, many are eager to learn what 2025 has in store. Here is what experts expect for the approaching year, along with things to consider for those planning to move.
Homebuyers Facing Tough Choices
As of October 2024, the average 30-year mortgage rate dropped to 6.78% compared to the previous year’s peak of 8% in October 2023. While this is good news for homebuyers, many still feel the weight of high borrowing costs, and affordability is still a.
Additionally, low inventory continues to be a concern. The National Association of Realtors (NAR) reported a supply of 4.3 months as of September 2024, this is still below the 5 to 6 months usually needed for a balanced market. For those planning a move, the inventory shortage will make it harder to find a new home.
Key Marketplace Stats To Consider
- The median home-sale price within the U.S. as of September 2024 was $404,500, a 3% increase year-over-year (NAR).
- Our current housing inventory is at 4.3 months, an increase from 3.4 months in 2023.
- According to the S&P CoreLogic Case-Shiller Index, the price of homes has slowed to a YOY gain of 5% in July 2024, down from 6.5% in February and March of this year.
2025 Predictions
Inventory
While inventory has been on the rise, experts are expecting this trend to continue in 2025, driven primarily by new construction. Greg McBride, Chief Financial Analyst at Bankrate, indicates that mortgage rates won’t fall low enough to encourage homeowners to sell their homes. Nonetheless, Carl Harris, chairman of the National Association of Home Builders (NAHB) says, “While housing affordability remains low, builders are feeling more optimistic about 2025 market conditions.”
Home Prices
The median sale price for houses in the U.S. reached a record high of $426,900 in June 2024 and has decreased slightly since then. In areas with more inventory of homes, prices will most likely stabilize or decrease. However, experts expect to see a continued increase in prices in areas with high demand.
Will 2025 Be A Buyer’s or Seller’s Market?
Despite the predicted increase in inventory, sellers are expected to still come out on top in 2025. For those planning to move in 2025, it’s important to keep your eyes on the high-demand areas, as these are where you will most likely find the most inventory.
A Positive Outlook Amidst the Challenges
Despite the challenges we face, experts predict to see lower interest rates. According to Bernard Markstein, president and chief economist for Markstein Advisors, lower interest rates will encourage more people to buy homes. This means that as borrowing costs decrease, we will start to see more buyers in the market creating more possibilities for those looking to buy a home.
Taking the combination of high mortgage rates, increase in home prices, and low inventory, professionals anticipate 2025 to be another challenging year for both buyers and sellers. But there is a silver lining with the potential for lower interest rates and higher inventory! So while the market will still be challenging, things might be looking up.
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