What to Expect for Real Estate in 2025
Looking ahead to 2025, a mix of evolving economic factors, shifting demographics, and changing consumer behaviors will continue to define the real estate market. Let’s explore key 2025 real estate trends to watch and what you can expect in the housing market over the next year.
Rising Home Sales
The housing market will stay as active as ever, with sales of both existing and new homes expected to rise in 2025. According to the National Association of Realtors, existing home sales are projected to rise 9% year-over-year, while new home sales could jump by 11%.
Home Prices to Increase Slowly
Experts predict a return to more moderate housing price increases in 2025. Home prices will continue to climb, but at a steadier, more manageable pace compared to the explosive price hikes witnessed in 2020.
Real estate company Redfin notes that the median asking price for a home is expected to rise by 4% over the course of the year. This aligns with the pace we saw in the second half of 2024, suggesting a return to a healthier, more balanced market.
Low Inventory Remains a Concern
Low housing inventory will remain an ongoing issue throughout the next year for both potential buyers and renters. A recent analysis from Zillow showed that the United States housing supply is short by 4.5 million homes.
Tackling inventory shortages will require innovative approaches, such as promoting adaptive reuse of commercial buildings for housing, incentivizing developers to build smaller homes, and streamlining zoning regulations to allow for higher-density developments.
Construction Costs & Supply Constraints
There are a lot of unknowns with a presidential transition that may significantly impact the housing market. The pace of home-building activity may slow down if tariffs on foreign goods and materials and discussed shifts in immigration policies move forward.
Experts say these disruptions could result in higher construction costs, which could mean fewer homes get built. With an already tight and competitive housing market, fewer new homes means we could see even higher prices.
Mortgage Rates Stabilize
If you’re looking for less loan rate fluctuations, you’re in luck. Freddie Mac predicts that 30-year fixed mortgage rates will remain between 6.08% to 7.44%, remaining stable in the new year compared to the ups and downs of this past year.
The Federal Reserve recently announced rate cuts in 2025 that could help keep rates on the lower end of that spectrum.
Strong Job Growth Fuels Housing Demand
A positive employment outlook will likely continue to bolster the housing market, as more people with stable incomes look to invest in the home of their dreams.
In total, 1.8 million jobs were added in the first nine months of 2024, according to the Bureau of Labor Statistics, marking a strong recovery in the labor market.
That said, low inventory and high demand means affordability still remains a challenge for many wannabe buyers.
Understand Your Home’s Value
Homebuyers, sellers, and investors must stay informed as they prepare for the year ahead. Navigating the highs and lows of the housing market starts with understanding your home’s value.
Akrivis can provide fast, accurate real estate evaluations and hybrid appraisals. These reports give you much-needed insights to help you make smart decisions about your property and finances. We can assess residential properties, commercial properties, and vacant or agricultural land throughout the United States.
If you need someone in your corner as you follow 2025 real estate trends, Akrivis is here. Contact us today for a residential valuation in five business days or less!