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The US housing market is expected to enter 2025, facing the same headwinds as this year. Mortgage rates are expected to remain volatile and house prices are expected to continue their upward trajectory, although on a slower pace than during the pandemic boom years.
Recent data points to a market in limbo, with the median single-family home price in October reaching $437,300, up from $426,800 in September, according to US Census figures. Meanwhile, the rental market has shown signs of cooling, with median rents hovering at $1,619 in October — virtually unchanged from the year before, according to Redfin.
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“If the housing market was going to crash, it would have already crashed by now,” Daryl Fairweather, chief economist at Redfin, told CNBC. “The housing market has been so resilient to interest rates rising as high as they have.”
Economists predict that house prices will rise by around 4% throughout 2025, marking a return to pre-pandemic growth rates. However, CoreLogic economist Selma Hepp told CNBC that price appreciation may remain flat during the spring buying season.
The rental landscape appears poised for shifts. A surge in new apartment construction is expected to keep national rent growth flat throughout 2025, potentially strengthening renters' negotiating position.
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Some property managers offer concessions such as free parking or waived fees to attract tenants.
Mortgage rates are likely to remain a wild card. While Redfin predicts an average of 6.8% in 2025, the path could shift based on economic policies and inflation trends. Jessica Lautz, deputy chief economist of the National Association of Realtors, expects rates to settle in the 6% range as 2025 progresses.
Home sales volume may finally see an increase after years of stagnation. According to a CNBC report, Redfin predicts that about four million homes will change hands in 2025, representing a 2% to 9% increase from 2024. “People have waited long enough,” Fairweather said, highlighting the growing demand from buyers and sellers who have delayed moving.