As we navigate the early months of 2025, the real estate market presents a dynamic landscape shaped by evolving economic indicators and expert analyses. The number one question we’re being asked right now is: What do you think will happen in the market this year?
Here are our predictions for the year ahead, informed by insights from industry authorities and recent data trends.
1. Mortgage Rates Stabilizing Around 6%
The National Association of REALTORS® (NAR) anticipates that mortgage rates will moderate, hovering near 6% in 2025. This stabilization suggests that the era of ultra-low rates is behind us, with 6% becoming the new normal. By historical standards, this remains below the long-term average of 7%, offering a relatively favorable environment for buyers. nar.realtor
2. Incremental Increase in Housing Inventory
After a prolonged period of tight housing supply, there are encouraging signs of inventory growth. Factors contributing to this include new construction projects and homeowners deciding to list their properties, spurred by stabilizing mortgage rates and improving market conditions. While housing shortages remain a long-term constraint, inventory levels are gradually improving and poised to increase further in 2025. However, despite these gains, inventory levels are still expected to fall short of pre-pandemic norms, continuing to present challenges for buyers. nar.realtor
3. Continued Appreciation of Home Values at a Moderate Pace
Home prices are expected to continue their upward trajectory in 2025, albeit at a more tempered pace compared to previous years. NAR forecasts a 2% increase in home prices for 2025, reflecting a shift towards a more balanced market. This moderation in price growth can be attributed to the combination of increased inventory and stabilizing mortgage rates, which together may help alleviate some of the affordability challenges buyers have faced in recent years. nar.realtor
The Bottom Line
The 2025 real estate market is poised for stabilization, with mortgage rates settling around 6%, a gradual increase in housing inventory, and continued, albeit slower, appreciation in home values. These trends suggest a move towards a more balanced market, offering opportunities for both buyers and sellers to navigate with greater confidence.
Note: These predictions are based on current data and expert analyses as of February 2025. The real estate market is influenced by a multitude of factors, and conditions may evolve as the year progresses.