Bad news if you’re planning to buy a home in 2025: This is how much the housing prices will increase next year
Experts in the real estate market have made their predictions for the year to come and pent-up demand combined with lack of supply will keep prices rising.
The predictions from real estate experts are in for what the housing market will look like in 2025. While there is some good news for renters, those looking to buy a home will see prices steadily rise throughout the next year.
Furthermore, mortgage rates are likely to stay above 6% and perhaps closer to 7% depending on what policies the incoming administration is able to push through. But Redfin warns “any year in which the presidential administration changes is unpredictable, and this one may be especially unpredictable.”
Bad news if you’re planning to buy a home in 2025: This is how much the housing prices will increase next year
Despite high mortgage rates and increasing inventory, home price growth continued to trend upward in 2024. Redfin’s 2025 prediction expects that the pace of rising prices will be similar to that of the second half of this year throughout 2025.
The real estate company forecasts that the median US home-sale price will be 4% higher by the end of the year. Realtor.com put the price growth slightly lower for next year at 3.7% in their 2025 Housing Forecast.
While Realtor.com is expecting existing for-sale inventory to be 11.7% higher in 2025 compared to this year Redfin doesn’t see the increased supply meeting demand. The higher prices will keep the American dream of owning a home out of reach for many.
We're predicting more home sales next year, but with rising prices and steady mortgage rates, many will keep renting. The silver lining is rental affordability should improve.
— Redfin (@Redfin) December 4, 2024
Let's break down our #housingmarket predictions👇https://t.co/QS9YcoB8yM
Renters will have the advantage in 2025
For those would-be homebuyers that are kept on the sidelines having to rent instead, they’ll benefit from a renters’ market. Both Redfin and Realtor.com are forecasting that rents will remain flat, or even drop slightly. Rental affordability will also benefit from rising wages.
Supply outpacing demand will be behind this trend, and it will continue to grow as the pandemic apartment-building boom is coming to fruition. This will also provide the potential to motivate landlords to offer concessions to tenants.
Our 2025 Housing Forecast report covers what homebuyers and sellers can expect in 2025, focusing on government policies, market trends, and challenges in affordability and supply.
— Realtor.com (@realtordotcom) December 9, 2024
🏡 See the Housing Forecast 2025 report here: https://t.co/IUToXsbiXY pic.twitter.com/WQU6FvdsJ2
Mortgage rates won’t change much
As far as mortgages go, Realtor.com is more optimistic predicting that rates will drop to the low-6% range by the end of the year. However, they note that mortgage payments will stay roughly the same due to rising home prices.
Redfin on the other hand sees rates staying closer to 7% throughout the year. Trump’s proposed tariffs “could be inflationary and enacting more tax cuts would increase the U.S. deficit, both of which would push mortgage rates up,” notes the real estate company.
However, in an alternative scenario, Redfin says that “if the economy weakens and/or if plans for tariffs and tax cuts are dialed back,” that could put downward pressure on mortgage rates lowering them to the low-6% range.
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