Real Estate Market Forecast 2025: Sales Volume, Pricing, and Inventory Examination
The housing market in 2025 is expected to undergo a shift, with home prices projected to decline modestly, mortgage rates remaining elevated, and inventory levels increasing somewhat. This forecast paints a picture of a market that is cooling, but still presents challenges and opportunities for both buyers and sellers.
Sellers are still in a position to sell their homes, but the market isn't as hot as it was a year ago. It is advisable for sellers to make necessary repairs before putting their home on the market to ensure it is in the best possible condition. Additionally, pricing the home competitively will be key to securing a sale, especially as more sellers enter the market and buyer negotiating power increases.
The Northeast region saw the biggest month-over-month sales decline, but prices are still up significantly year-over-year. This trend is expected to continue as inventory levels rise, giving buyers more choices. However, the persistent shortage of homes is still driving record high home prices, according to NAR Chief Economist Lawrence Yun.
The market cooling is also influenced by economic uncertainty, moderate consumer confidence, inflation pressures, and concerns about a possible late-2025 recession. These factors contribute to a cautious buyer environment, with buyers being advised to be patient, make multiple offers, and not overextend themselves financially.
Mortgage rates are expected to remain high, averaging around 6.4% to 6.7% for 30-year fixed loans through 2025. This continues to constrain affordability and dampen buyer urgency. Buyers are recommended to shop around for mortgage rates to find the best deal, and to get pre-approved for a mortgage before seriously looking at homes.
The rental market growth is also softening, with slower increases in rents due to more construction and higher vacancy rates. This could further affect demand dynamics in home buying vs. renting.
First-time homebuyers made up 30% of sales in June, but face significant challenges due to high prices and mortgage rates. About 29% of transactions were cash sales, which is an increase from last year.
If a quick sale is important to sellers, it will be helpful to price their home competitively rather than delay selling it. Sellers should also consider staging their home to make it more appealing to buyers.
In sum, 2025’s housing market trends reflect a balance of upward inventory supply and persistent affordability challenges due mainly to sustained elevated mortgage rates and economic uncertainties, leading to modest price declines and muted sales activity. Despite these challenges, there are potential benefits for homebuyers, including more choices, slower price growth, easier negotiations, lower prices, and a leading indicator for the housing market.
[1] Realtor.com (2025). Midyear Housing Forecast. [2] National Association of Realtors® (2025). Existing-Home Sales Decline in June. [3] Federal Reserve (2025). Economic Projections. [4] Mortgage Bankers Association (2025). Mortgage Rate Forecast.
- The cooling housing market in 2025 might present challenges for sellers, as home prices are expected to decrease modestly and mortgage rates will likely remain elevated, necessitating sellers to make necessary repairs and price their homes competitively.
- For buyers, the rise in inventory levels offers more choices, but persistent high home prices, fuelled by a continuing shortage of homes, could still pose a challenge.
- The Northeast region is experiencing a month-over-month sales decline, yet prices are still up significantly year-over-year, a trend expected to continue as inventory levels increase.
- Economic uncertainty, moderate consumer confidence, inflation pressures, and concerns about a possible late-2025 recession are factors contributing to a cautious buyer environment, urging buyers to be patient, make multiple offers, and be mindful of their personal finances.
- Mortgage rates are forecasted to remain high, averaging around 6.4% to 6.7% for 30-year fixed loans, which could constrain affordability and dampen buyer urgency. Buyers are advised to shop around for the best mortgage rates and to get pre-approved for a mortgage before seriously looking at homes.
- The rental market growth is softening, with slower rent increases due to more construction and higher vacancy rates. This could further impact the demand dynamics between home buying and renting, potentially benefiting first-time homebuyers who face significant challenges due to high prices and mortgage rates.
