2025 Market Predictions

As we prepare to start a new year, many of us have questions on what the real estate market and mortgage interest predictions are for 2025.

In an article from Bankrate.com (2025Market Predictions) 

Mortgage Rates: The average 30-year mortgage rate decreased from over 8% in October 2023 to 6.84% by early December 2024. While rates are expected to decline gradually in 2025, they will likely remain above the ultra-low levels of recent years, according to experts.

Housing Inventory: Housing supply improved to a 4.2-month inventory by October 2024, up from 2.9 months in February. While still below the 5-6 months needed for a balanced market, this marks significant progress.
Homebuilder Optimism: Lower interest rates have boosted homebuilder confidence, with greater access to capital expected to support new construction.

Political Implications: The incoming Trump administration may influence housing through proposed tax cuts, tariffs, and regulatory changes. Economists predict limited Federal Reserve rate cuts in 2025, which could keep mortgage rates elevated. The Republican sweep has also raised builder confidence due to anticipated regulatory easing.

Home Sales: Sales fell in 2024 but slightly improved by October, marking the first rise since 2021.
CoreLogic predicts a 9% increase in sales for 2025 due to lower mortgage rates and greater home availability, easing bidding wars and improving affordability.
Declining rates may reduce the “lock-in effect,” encouraging homeowners with low-rate mortgages to sell.

Housing Inventory: Inventory has risen gradually, with most future growth expected from new construction rather than existing homes.
Builders are optimistic about 2025, supported by improving market conditions despite low affordability.

Home Prices: Median prices reached $426,900 in mid-2024, with slower growth expected in 2025 (2% vs. 4.5% in 2024).
Price trends will vary by region: areas with higher inventory, like Atlanta and Salt Lake City, may see decreases, while markets like Miami, Boston, and Denver could see continued increases.

Market Dynamics: 2025 will likely remain a seller’s market in most areas due to limited inventory.
Some regions with increased inventory may shift toward a buyer’s market, offering better opportunities for price negotiation.

Bottom Line: While high mortgage rates, elevated prices, and limited inventory will challenge buyers and sellers, cooling rates and improved conditions could drive market activity. Experts recommend working with experienced local real estate agents to navigate the complexities of the market.

If you are going to be in the market to sell or purchase a new home in 2025, give us a call.  We would like to discuss your Real Estate Needs and goals for the year.  If you have questions on the market or would like to see stats for your specific area, let us know!  We are here to assist with your goals!