2025 Housing Market Forecasts: What To Expect
Looking ahead to 2025, it’s important to know what experts are projecting for the housing market. And whether you’re thinking of buying or selling a home next year, having a clear picture of what they’re calling for can help you make the best possible decision for your homeownership plans. Here’s an early look at the most recent projections on mortgage rates, home sales, and prices for 2025. Mortgage Rates Are Projected To Come Down Slightly Mortgage rates play a significant role in the housing market. The forecasts for 2025 from Fannie Mae, the Mortgage Bankers Association (MBA), the National Association of Realtors (NAR), and Wells Fargo show an expected gradual decline in mortgage rates over the course of the next year (see chart below): Mortgage rates are projected to come down because continued easing of inflation and a slight rise in unemployment rates are key signs of a strong but slowing economy. And many experts believe these signs will encourage the Federal Reserve to lower the Federal Funds Rate, which tends to lead to lower mortgage rates. As Morgan Stanley says: “With the U.S. Federal Reserve widely expected to begin cutting its benchmark interest rate in 2024, mortgage rates could drop as well—at least slightly.” Expect More Homes To Sell The market will see an increase in both the supply of available homes on the market, as well as a rise in demand, as more buyers and sellers who have been sitting on the sidelines because of higher rates choose to make a move. That’s one big reason why experts are projecting an increase in home sales next year. According to Fannie Mae, MBA, and NAR, total home sales are forecast to climb slightly, with an average of about 5.4 million homes expected to sell in 2025 (see graph below): That would represent a modest uptick from the lower sales numbers in 2023 and 2024. For reference, about 4.8 million total homes were sold in 2023, and expectations are for around 4.5 million homes to sell this year. While slightly lower mortgage rates are not expected to bring a flood of buyers and sellers back to the market, they certainly will get more people moving. That means more homes available for sale – and competition among buyers who want to purchase them. Home Prices Will Go Up Moderately More buyers ready to jump into the market will put continued upward pressure on prices. Take a look at the latest price forecasts from 10 of the most trusted sources in real estate (see graph below): On average, experts forecast home prices will rise nationally by about 2.6% next year. But as you can see, there’s a range of opinions on how much prices will climb. Experts agree, however, that home prices will continue to increase moderately next year at a slower, more normal rate. But keep in mind, prices will always vary by local market. Bottom Line Understanding 2025 housing market forecasts can help you plan your next move. Whether you're buying or selling, staying informed about these trends will ensure you make the best decision possible. Reach out to a trusted real estate agent to discuss how these forecasts could impact your plans.
Read MoreNot a Crash: 3 Graphs That Show How Today’s Inventory Differs from 2008
Even if you didn’t own a home at the time, you probably remember the housing crisis in 2008. That crash impacted the lives of countless people, and many now live with the worry that something like that could happen again. But rest easy, because things are different than they were back then. As Business Insidersays: “Though many Americans believe the housing market is at risk of crashing, the economists who study housing market conditions overwhelmingly do not expect a crash in 2024 or beyond.” Here’s why experts are so confident. For the market (and home prices) to crash, there would have to be too many houses for sale, but the data doesn’t show that’s happening. Right now, there’s an undersupply, not an oversupply like the last time – and that’s true even with the inventory growth we’ve seen this year. You see, the housing supply comes from three main sources: Homeowners deciding to sell their houses (existing homes) New home construction (newly built homes) Distressed properties (foreclosures or short sales) And if we look at those three main sources of inventory, you’ll see it’s clear this isn’t like 2008. Homeowners Deciding To Sell Their Houses Although the supply of existing (previously owned) homes is up compared to this time last year, it’s still low overall. And while this varies by local market, nationally, the current months’ supply is well below the norm, and even further below what we saw during the crash. The graph below shows this more clearly. If you look at the latest data (shown in green), compared to 2008 (shown in red), we only have about a third of that available inventory today. So, what does this mean? There just aren’t enough homes available to make values drop. To have a repeat of 2008, there’d need to be a lot more people selling their houses with very few buyers, and that’s not the case right now. New Home Construction People are also talking a lot about what’s going on with newly built houses these days, and that might make you wonder if homebuilders are overdoing it. Even though new homes make up a larger percentage of the total inventory than the norm, there’s no need for alarm. Here’s why. The graph below uses data from the Census to show the number of new houses built over the last 52 years. The orange on the graph shows the overbuilding that happened in the lead-up to the crash. And, if you look at the red in the graph, you’ll see that builders have been underbuilding pretty consistently since then: There’s just too much of a gap to make up. Builders aren’t overbuilding today, they’re catching up. A recent article from Bankrate says: “What’s more, builders remember the Great Recession all too well, and they’ve been cautious about their pace of construction. The result is an ongoing shortage of homes for sale.” Distressed Properties (Foreclosures and Short Sales) The last place inventory can come from is distressed properties, including short sales and foreclosures. During the housing crisis, there was a flood of foreclosures due to lending standards that allowed many people to get a home loan they couldn’t truly afford. Today, lending standards are much tighter, resulting in more qualified buyers and far fewer foreclosures. The graph below uses data from ATTOM to show how things have changed since the housing crash: This graph makes it clear that as lending standards got tighter and buyers became more qualified, the number of foreclosures started to go down. And in 2020 and 2021, the combination of a moratorium on foreclosures (shown in black) and the forbearance program helped prevent a repeat of the wave of foreclosures we saw when the market crashed. While you may see headlines that foreclosure volume is ticking up – remember, that’s only compared to recent years when very few foreclosures happened. We’re still below the normal level we’d see in a typical year. What This Means for You Inventory levels aren’t anywhere near where they’d need to be for prices to drop significantly and the housing market to crash. As Forbes explains: “As already-high home prices continue trending upward, you may be concerned that we’re in a bubble ready to pop. However, the likelihood of a housing market crash—a rapid drop in unsustainably high home prices due to waning demand—remains low for 2024.” Mark Fleming, Chief Economist at First American, points to the laws of supply and demand as a reason why we aren’t headed for a crash: “There’s just generally not enough supply. There are more people than housing inventory. It’s Econ 101.” And Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says: “We will not have a repeat of the 2008–2012 housing market crash. There are no risky subprime mortgages that could implode, nor the combination of a massive oversupply and overproduction of homes.” Bottom Line The market doesn’t have enough available homes for a repeat of the 2008 housing crisis – and there’s nothing that suggests that will change anytime soon. That’s why housing experts and inventory data tell us there isn’t a crash on the horizon.
Read MoreWhy Working with a Real Estate Professional Is Crucial Right Now
Navigating the housing market can be tricky, especially these days. That’s why having an experienced guide when buying or selling a home is so important. The market isn’t exactly straightforward right now, and working with a real estate expert can offer insights and advice that make all the difference. While today’s market conditions might seem confusing or overwhelming, you don’t have to handle them alone. With a trusted expert leading you through every step, you can navigate the process with the clarity and confidence you deserve. Here are just a few of the ways a real estate expert is invaluable: Contracts – Agents help with the disclosures and contracts necessary in today’s heavily regulated environment. Experience – In today’s market, experience is crucial. Real estate professionals know the entire sales process, including how it’s changing right now. Negotiations – Your real estate advisor acts as a buffer in negotiations with all parties, and advocates for your best interests throughout the entire transaction. Industry Expertise– Knowledge is power in today’s market, and your advisor will simply and effectively explain processes, market conditions, and key terms, translating what they mean for you along the way along the way. Pricing – A real estate professional understands current real estate values when setting the price of your home or helping you make an offer to purchase one. Pricing matters more than ever right now, so having expert advice will help ensure you’re set up for success. A real estate agent is a crucial guide through this challenging market, but not all agents are created equal. A true expert can carefully walk you through the whole real estate process, look out for your unique needs, and advise you on the best ways to achieve success. Finding an expert real estate advisor – not just any agent – should be your top priority if you want to buy or sell a home. As Bankrate says: “Real estate is very localized, and you want someone who’s extremely knowledgeable about the market in your specific area. You should also look for someone with a successful track record of negotiating and closing deals, preferably for homes similar to the kind you want to buy.” What’s the Key To Choosing the Right Expert? Like any relationship, it starts with trust. You’ll want to know you can depend on that person to always put you and your best interests first. That means hiring a true professional. As Business Insider explains: “As long as you’ve properly vetted the agents you’re considering and ensured they have the necessary expertise, it’s ok to go with your gut when making your final decision on which real estate agent you want to work with. You’re going to be working closely with this person, so it’s important to choose an agent you’re comfortable with.” Bottom Line It’s critical to have an expert on your side who’s well-versed in navigating today’s housing market dynamics. If you’re planning to buy or sell a home this year, connect with a real estate professional who will give you the best advice and guide you along the way.
Read MoreHomeowners Gained $28K in Equity over the Past Year
If you own a home, your net worth has probably gone up a lot over the past year. Home prices have been rising, which means you’re building equity much faster than you might think. Here’s how it works. Equity is the current value of your home minus what you owe on the loan. Over the past year, there have still been more people wanting to buy than there are homes available for sale, and that’s pushed prices up. That rise in prices has translated directly into increasing equity for homeowners. How Much Equity Have You Earned over the Past 12 Months? According to the latest Homeowner Equity Insights from CoreLogic, the average homeowner’s equity has grown by $28,000 in the last year alone. That’s the national average, so if you want to see what’s happening in your state, check out the map below. It uses data from CoreLogic to show how much equity has grown in each state over the past year. You’ll notice every single state with sufficient data saw annual equity gains: What If You Bought Your House Before the Pandemic? If you bought your house before the pandemic, the equity news is even better. According to data from Realtor.com, home prices shot up by 37.5% from May 2019 to May 2024, meaning your home’s value has likely increased significantly. Ralph McLaughlin, Senior Economist at Realtor.com, says: “Homeowners have seen extraordinary gains in home equity over the past five years.” To give context to how much equity can stack up over time, Selma Hepp, Chief Economist at CoreLogic, explains the total equity the typical homeowner has today: “With home prices continuing to reach new highs, owners are also seeing their equity approach the historic peaks of 2023, close to a total of $305,000 per owner.” How Your Rising Home Equity Can Help You With how prices skyrocketed a few years ago, and the ongoing price growth today, homeowners clearly have substantial equity built up – and that has some serious benefits. You could use it to start a business, fund an education, or even to help you afford your next home. When you sell, the equity you’ve built up comes back to you, and may be enough to cover a big part – or even all – of your next home’s down payment. Bottom Line If you're planning to move, the equity you've gained can really help. Curious about how much you have and how you can use it to help pay for your next home? Connect with a local real estate agent.
Read MoreWhy Your Asking Price Matters Even More Right Now
If you’re thinking about selling your house, here’s something you really need to know. Even though it’s still a seller’s market today, you can’t pick just any price for your listing. While home prices are still appreciating in most areas, they’re climbing at a slower pace because higher mortgage rates are putting a squeeze on buyer demand. At the same time, the supply of homes for sale is growing. That means buyers have more options and your house may not stand out as much, if it’s not priced right. Those two factors combined are why the asking price you set for your house is more important today than it has been in recent years. And some sellers are finding that out the hard way. That’s leading to more price reductions. Mike Simonsen, Founder and President of ALTOS Research, explains: “Looking at the price reductions data set . . . It all fits in the same pattern of increasing supply and homebuyer demand that is just exhausted by high mortgage rates. . . As home sellers are faced with less demand than they expected, more of them have to reduce their prices.” That’s because they haven’t adjusted their expectations to today’s market. Maybe they’re not working with an agent, so they don’t know what’s happening around them. Or they’re not using an agent who prioritizes being a local market expert. Either way, they aren’t basing their pricing decision on the latest data available – and that’s a miss. If you want to avoid making a pricing mistake that could turn away buyers and delay your sale, you need to work with an agent who really knows your local market. If you lean on the right agent, they’ll help you avoid making mistakes like: Setting a Price That’s Too High: Some sellers have unrealistic expectations about how much their house is worth. That’s because they base their price on their gut or their bottom line, not the data. An agent will help you base your price on facts, not opinion, so you have a better chance of hitting the mark. Not Considering What Houses Are Actually Selling for: Without an agent’s help, some sellers may use the wrong comparable sales (comps) in their area and misjudge the market value of their home. An agent has the expertise needed to find true comps. And they’ll use those to give you valuable insights into how to price your house in a way that’s competitive for you and your future buyer. Overestimating Home Improvements: Sellers who have invested a significant amount of money in home improvements may overestimate how much those upgrades affect their home’s value. While certain improvements can increase a home’s appeal, not all upgrades are going to get a great return on their investment. An agent factors in what you’ve done and what buyers in your area actually want as they set the price. Ignoring Feedback and Market Response: Some sellers may be resistant to lowering their asking price based on feedback they’re getting in open houses. An agent will remind the seller how important it is to be flexible and respond to market feedback in order to attract qualified buyers. In the end, accurate pricing depends on current market conditions – and only an agent has all the data and information necessary to find the right price for your house. The right agent will use that expertise to develop a pricing strategy that’s based on current market conditions and designed to get your house sold. That way you don’t miss the mark. Bottom Line The right asking price is even more important today than it’s been over the last few years. To avoid making a costly mistake, connect with your local real estate agent.
Read MoreWhat’s Next for Home Prices and Mortgage Rates?
If you’re thinking of making a move this year, there are two housing market factors that are probably on your mind: home prices and mortgage rates. You’re wondering what’s going to happen next. And if it’s worth it to move now, or better to wait it out. The only thing you can really do is make the best decision you can based on the latest information available. So, here’s what experts are saying about both prices and rates. 1. What’s Next for Home Prices? One reliable place you can turn to for information on home price forecasts is the Home Price Expectations Survey from Fannie Mae – a survey of over one hundred economists, real estate experts, and investment and market strategists. According to the most recent release, experts are projecting home prices will continue to rise at least through 2028 (see the graph below): While the percent of appreciation varies year-to-year, this survey says we’ll see prices rise (not fall) for at least the next 5 years, and at a much more normal pace. What does that mean for your move? If you buy now, your home will likely grow in value and you should gain equity in the years ahead. But, based on these forecasts, if you wait and prices continue to climb, the price of a home will only be higher later on. 2. When Will Mortgage Rates Come Down? This is the million-dollar question in the industry. And there’s no easy way to answer it. That’s because there are a number of factors that are contributing to the volatile mortgage rate environment we’re in. Odeta Kushi, Deputy Chief Economist at First American, explains: “Every month brings a new set of inflation and labor data that can influence the direction of mortgage rates. Ongoing inflation deceleration, a slowing economy and even geopolitical uncertainty can contribute to lower mortgage rates. On the other hand, data that signals upside risk to inflation may result in higher rates.” What happens next will depend on where each of those factors goes from here. Experts are optimistic rates should still come down later this year, but acknowledge changing economic indicators will continue to have an impact. As a CNET article says: “Though mortgage rates could still go down later in the year, housing market predictions change regularly in response to economic data, geopolitical events and more.” So, if you’re ready, willing, and able to afford a home right now, partner with a trusted real estate advisor to weigh your options and decide what’s right for you. Bottom Line Connect with a trusted real estate agent to make sure you have the latest information available on home prices and mortgage rate expectations. Together you’ll go over what the experts are saying so you can make an informed decision on your move.
Read MoreHome Prices Aren’t Declining, But Headlines Might Make You Think They Are
If you’ve seen the news lately about home sellers slashing prices, it’s a great example of how headlines do more to terrify than clarify. Here’s what’s really happening with prices. The bottom line is home prices are higher than they were a year ago at this time, and they’re expected to keep rising, just at a slower pace. But a recent article from Redfin notes, “Price Drops Hit Highest Level in 18 Months As High Rates Dampen Buyer Demand.” And that might make you think prices are declining. Now, while it’s true the latest report from Realtor.com also shows 16.6% of homes on the market had price reductions in May, which is up from 12.7% last May, that doesn’t mean overall home prices are falling. The key is knowing the difference between the asking price and the sold price. Understanding Asking Price vs. Sold Price In essence, the asking price, also known as a listing price, is the amount a seller hopes to get for their home when they list it. In reality, sellers can’t just put any price tag on their house and expect it to sell for top dollar. Today’s buyers are savvy customers, and when they aren’t willing to pay a premium for a home because their budgets are strained by higher mortgage rates, sellers need to adjust. And that’s what’s happening right now. Based on market factors and what offers that seller receives, that asking price can change. If a seller isn’t getting much foot traffic, you may see them revise the price and make an adjustment to reignite interest in the home – and sometimes that’s because they’ve overpriced it from the start. That’s where price reductions come in, and when you see “price drops” in a headline, it sounds like declining home prices. Mike Simonsen, CEO and Founder of Altos Research, says: “Not only is the share of homes with price cuts elevated compared to one year ago, but more price cuts are happening each week than last year.” On the other hand, the final sold price is the amount a buyer actually pays when the transaction is complete. Here’s the most important thing to note: Actual sold prices are still rising, and they’re expected to continue to do so at least over the next 5 years. What Does This Mean for Home Prices? So, while there’s been an increase in price reductions recently, this doesn’t mean overall home values are declining. Instead, it’s a sign that demand is moderating. And, as a result, sellers are adjusting their expectations to align with today’s market reality. Even with more price reductions, home values are still growing on an annual basis, as they do nearly every year in the housing market. According to the Federal Housing Finance Agency (FHFA), home prices went up 6.6% over the last year (see below): This map shows how prices rose just about everywhere in the country, indicating the market is not in decline. So, while seller price reductions are often a leading indicator that prices may moderate in the months ahead, which experts have been saying for a while is expected to happen, they aren’t necessarily reason for alarm. The same article from Redfin also states: “. . .those metrics suggest sale-price growth could soften in the coming months as persistently high mortgage rates turn off homebuyers. For now, the median-home sale price is up 4.3% year over year to another record high. . .” And with inventory as tight as it is today, price moderation is much more likely in upcoming months than price declines. Why This Is Good News for Buyers and Sellers For buyers, more realistic asking prices mean a better chance of securing a home at a fair price. It also means you can enter the market with more confidence, knowing prices are stabilizing rather than continuing to skyrocket. For sellers, understanding the need to adjust your asking price can lead to faster sales and fewer price negotiations. Setting a realistic price from the start can attract more serious buyers and lead to smoother transactions. Bottom Line While the uptick in price reductions might seem troubling, it’s not a cause for concern. It reflects a market adjusting to new conditions. Home prices are continuing to grow, just at a more moderate pace.
Read MoreDo Elections Impact the Housing Market?
The 2024 Presidential election is just months away. As someone who’s thinking about potentially buying or selling a home, you’re probably curious about what effect, if any, elections have on the housing market. It’s a great question because buying or selling a home is a major decision, and it’s natural to wonder how such a major event might impact your plans. Historically, Presidential elections have only had a small, temporary impact on the housing market. Here’s the latest on exactly what’s happened to home sales, prices, and mortgage rates throughout those time periods. Home Sales During the month of November, in years when the Presidential election takes place, there’s typically a slight slowdown in home sales. As Ali Wolf, Chief Economist at Zonda, explains: “Usually, home sales are unchanged compared to a non-election year with the exception being November. In an election year, November is slower than normal.” This is mostly because some people feel uncertain and hesitant about making big decisions during such a pivotal time. However, it’s important to know this slowdown is temporary.Historically, home sales bounce back in December and continue to rise the following year. In fact, data from the Department of Housing and Urban Development (HUD) and the National Association of Realtors (NAR) shows after nine of the last 11 Presidential elections, home sales went up the next year (see graph below): The graph shows annual home sales going back to 1978. Each year with a Presidential election is noted in blue. The year immediately after each election is green if existing home sales rose that year. The two orange bars represent the only years when home sales decreased after an election. Home Prices What about home prices? Do they drop during election years? Not typically. As residential appraiser and housing analyst Ryan Lundquist puts it: “An election year doesn’t alter the price trend that is already happening in the market.” Home prices are pretty resilient. They generally rise year-over-year, regardless of elections. The latest data from NAR shows after seven of the last eight Presidential elections, home prices increased the following year (see graph below): Just like the previous graph, this shows election years in blue. The only year when prices declined after an election is in orange. That was during the housing market crash, which was far from a typical year. Today’s market is different than it was back then. All the green bars represent when prices rose the following year. So, if you’re worried about your home losing value because of an election, you can rest easy knowing prices rise after most Presidential elections. Mortgage Rates Mortgage rates are important because they affect how much your monthly payment will be when you buy a home. Looking at the last 11 Presidential election years, data from Freddie Mac shows mortgage rates decreased from July to November in eight of them (see chart below): Most forecasts expect mortgage rates to ease slightly throughout the remainder of the year. If they’re right, this year will follow the trend of declining rates leading up to most previous elections. And if you’re looking to buy a home in the coming months, this could be good news, as lower rates could mean a lower monthly payment. What This Means for You So, what’s the big takeaway? While Presidential elections do have some impact on the housing market, the effects are usually small and temporary. As Lisa Sturtevant, Chief Economist at Bright MLS, says: “Historically, the housing market doesn’t tend to look very different in presidential election years compared to other years.” For most buyers and sellers, elections don’t have a major impact on their plans. Bottom Line While it’s natural to feel a bit uncertain during an election year, history shows the housing market remains strong and resilient. If you have questions, reach out to a local real estate agent. They’re here to help you navigate the market, election year or not.
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