U.S. Housing Market Forecast for 2025: Frequently Asked Questions

We’re doing something different for 2025. Instead of publishing our standard housing market forecast for the U.S., we decided to frame it around frequently asked questions (FAQs).

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This page contains common questions home buyers and real estate professionals ask about the current state of the housing market and the forecast for the rest of 2025.

What’s the housing market forecast for 2025?

The general consensus among most forecasters is that the U.S. real estate market of 2025 will closely resemble what we saw during 2024, with some minor changes.

Home prices in most cities are expected to rise gradually this year, following a period of decline and plateau that occurred over the past two years. But this can vary from region to region.

  • Some housing markets (including many in Florida) could see a big rise in home prices and home sales in 2025.
  • Other markets (including many in Texas) might see a more sluggish pace and little to no price growth in 2025.
  • The bulk of the country will likely fall in the middle of the spectrum, with modest growth over the course of the year.

Affordability challenges will continue this year, and they could put a damper on housing market activity. Home prices and mortgage rates are higher today than during the past few years.

U.S. housing market outlook for 2025
  • Nationally, home prices in the U.S. are expected to increase by a single digit this year, probably somewhere between 1% and 4%.
  • Mortgage rates are expected to gradually decrease throughout 2025, which could help boost demand.
  • Existing home sales are expected to slowly increase through 2026 after falling sharply in 2023 and 2024.
  • Newly built home sales are expected to continue to expand on their 2024 gains, but will be limited by competition for land and labor.

Will home prices rise or fall in 2025?

At the national level, most experts expect home prices to rise in 2025.

Fannie Mae’s chief economist Mark Palim said that his team expects “home price growth easing from recent highs but staying positive” this year.

But at the local level, this could vary significantly from one city to the next.

Realtor.com recently published a housing market forecast for the nation’s 100 largest metro areas, with projections for both home prices and sales. They expect prices to rise in nearly all of those markets, with forecasts ranging from 2% to 13%.

The following graph shows U.S. home values over the past eight years, based on data provided by Zillow. Notice the pandemic-fueled price acceleration that began in 2020, along with the mild correction that occurred in late 2022.

Graph showing U.S. home price trends as of January 2025

The far-right side of this graph shows a return to slow but steady home-price growth. Most housing market forecasts for 2025 suggest we’ll see more of that in the months ahead.

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What will mortgage rates do in 2025?

When this article was updated in early January, the average rate for a 30-year fixed-rate mortgage was 6.91%. Mortgage industry analysts expect rates to decline a bit during 2025, possibly dropping down close to 6%.

Researchers from Freddie Mac said they expect rates to “gradually decline” throughout the year, and that this trend could “loosen some of the rate lock-in effect for existing homeowners, offering more inventory in the market.”

Similarly, a recent forecast from Fannie Mae stated: “Average mortgage rates will decline modestly [in 2025] but remain above 6 percent, with likely bouts of volatility.”

Will the U.S. real estate market crash in 2025?

It’s highly unlikely. But anything’s possible.

A real estate market crash refers to a sudden and substantial decline in home prices across a broad geographic area. It usually coincides with a sharp increase in foreclosures and a significant decrease in home sales activity.

In 2025, a major crash like the one we saw in 2008 is unlikely. Most experts agree that the factors that led to the previous crash (like subprime mortgages and rampant overbuilding) are not present in the current market. It’s quite the opposite.

A significant price correction is also not predicted for 2025. Some markets could see some additional cooling this year, possibly with modest price declines. But the prevailing forecast is that the market will remain stable for the foreseeable future with gradual price growth.

Will there be more inventory (homes for sale) this year?

In many housing markets across the U.S., last year’s inventory growth could benefit those seeking to buy a home in 2025. Additionally, the market has shifted to give buyers more negotiating leverage—at least in most parts of the country.

According to a December 2024 report from Realtor.com:

“Growth in inventory with single family home starts is expected to grow 13.8% and existing for-sale home inventory is expected to grow by 11.7%, which will help bring the first balanced market in nine years.”

Is it more of a buyer’s or seller’s market this year?

This will depend on where you live.

Nationally, the U.S. real estate market has become more balanced over the past three years, following a strong seller’s market that extended from mid-2020 to early 2022.

In many cities, home buyers and sellers currently have equal leverage in the market.

But we’re also seeing some polar opposites that tend to lean one way or the other. For example, the state of Florida has become one big buyer’s market, while many coastal cities in California continue to strongly favor sellers. There’s a broad spectrum in between.

Will affordability improve this year?

Unfortunately, housing market affordability will likely worsen in 2025. While some analysts expect mortgage rates to drop a bit later this year, it probably wouldn’t be enough to offset today’s higher home prices.

In 2025, steadily rising home prices could further reduce affordability, squeezing some buyers out of the market altogether. This trend will be most noticeable in cities with very low inventory levels, which typically leads to faster price growth.

And apparently, most Americans are well aware of the affordability issue.

A recent survey from the Pew Research Center found that most Americans (69%) are “very concerned” about the cost of housing. This could be a limiting factor for the real estate market in 2025, especially if prices continue to climb.

Will home sales increase in 2025?

Many of the forecasts for 2025 predict that home sales volume across the U.S. will increase this year compared to last year.

Back in November, National Association of Realtors chief economist Lawrence Yun predicted that existing home sales would rise 9% year-over-year, while new home sales would increase by 11%. Yun expects that growth trend to continue into 2026 as well, with even more sales.

Also in November, researchers from Zillow wrote: “Expect to see more sales and only modest home value growth in 2025 as the market slowly becomes unstuck.”

And in December, analysts from Realtor.com predicted that U.S. home sales would increase slightly in 2025 “with an expected annual count of sales to be 1.5% more than 2024, for an annual tally of 4.07 million sales.”

Nearly every source we reviewed predicts that home sales will rise slightly in 2025.

Will it be a good year to buy a home?

This question can only be answered on a case by case basis, by taking local market conditions and personal financial circumstances into account.

  • At the start of 2025, some housing markets across the U.S. offer buyer-friendly conditions with the prospect of steady price growth ahead. These are generally “good” markets for buyers, from an investment and timing standpoint.
  • In contrast, other cities might strongly favor sellers due to low supply. Or they might still be experiencing price declines, making it a questionable time to purchase a home.

Home buyers should research these trends locally rather than nationally, with a special focus on local price trends and sales activity.

That being said, 2025 could be a great time to buy a home for many people across the U.S. Economists expect home values to increase for the foreseeable future, a scenario that could help homeowners build equity and personal wealth over time.

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Authored by seasoned analyst Brandon Cornett, our newsletter will help you understand what’s happening in the real estate market right now, and where things might be headed.

Disclaimer: This report contains forward-looking projections relating to the real estate market. Such views are the equivalent of an educated guess and should be treated as such. The Home Buying Institute (HBI) makes no claims or assertions about future housing trends.

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Brandon Cornett

Brandon Cornett is a veteran real estate market analyst, reporter, and creator of the Home Buying Institute. He has been covering the U.S. real estate market for more than 15 years. About the author