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The housing market in 2025 could have a more favorable outlook than much of 2024 had, due to improving mortgage rates and inventory levels. There’s still uncertainty in the air, though: Rising prices and slowing construction could cause some trouble for buyers in 2025, and the impact of the presidential election remains a wild card.
Home prices, mortgage rates, inventory levels and more will all shape housing affordability moving into 2025.
Housing inventories have also been improving of late, with a 4.3-month supply at the end of September 2024, according to existing-home data from the National Association of Realtors® (NAR). While that is still below the 5 to 6 months typically needed for a balanced market, it’s a significant improvement from the 2.9-month supply seen back in February. And there’s growing optimism among homebuilders, too, with lower interest rates granting more potential access to capital.
The volume of homes sold has fallen off in 2024, with the most recent existing-home sales numbers sliding both month-over-month and year-over-year, according to NAR. Many buyers are staying on the sidelines, anticipating lower mortgage rates to come in 2025 and hoping for prices to moderate.
“Home sales have been essentially stuck at around a four-million-unit pace for the past 12 months, but factors usually associated with higher home sales are developing,” NAR Chief Economist Lawrence Yun said in an October statement. “There are more inventory choices for consumers, lower mortgage rates than a year ago and continued job additions to the economy.”