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The U.S. housing market is set to enter 2025, facing the same crosswinds as this year. Mortgage rates are expected to remain volatile and home prices are expected to continue their upward trajectory, albeit at a slower pace than during the pandemic boom years.
Recent data points to a market in limbo, with October’s median single-family home price reaching $437,300, up from $426,800 in September, according to U.S. Census figures. Meanwhile, the rental market has shown signs of cooling, with median rents hovering at $1,619 in October – practically unchanged from the previous year, according to Redfin.
“If the housing market were going to crash, it would have already crashed by now,” Daryl Fairweather, chief economist at Redfin, said to CNBC. “The housing market has been so resilient to interest rates going up as high as they have.”
Economists project home prices will rise about 4% throughout 2025, marking a return to pre-pandemic growth rates. However, CoreLogic economist Selma Hepp told CNBC that price appreciation might 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 like free parking or waived fees to attract tenants.
Mortgage rates will likely remain a wild card. While Redfin forecasts an average of 6.8% in 2025, the trajectory could shift based on economic policies and inflation trends. Jessica Lautz, deputy chief economist at the National Association of Realtors, expects rates to settle in the 6% range as 2025 unfolds.
Home sales volume might finally see an uptick after years of constraint. According to the CNBC report, Redfin projects approximately four million homes will change hands in 2025, representing a 2% to 9% increase from 2024. “People have waited long enough,” Fairweather said, pointing to pent-up demand from buyers and sellers who’ve delayed moves.
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