Uncertainty in the Housing Market Peaked at a Three-Year High in 2025: According to Bank of America
The housing market in 2025 is set to experience a phase of adjustment, with several key trends and factors influencing buying, selling, and holding decisions for both homeowners and prospective buyers.
**Market Growth and Inventory**
The single-unit housing market is projected to experience sluggish or slightly negative growth in 2025, but with a rebound growth of around 8.2% projected for 2026. Inventory levels, while gradually increasing, remain below pre-pandemic levels, offering improved affordability and choices for buyers, albeit still relatively constrained compared to historic averages.
**Home Prices**
Prices are expected to increase modestly by about 1% to 4% in 2025, depending on the region. Home prices have begun to stabilise or slightly decline in many areas due to increased inventory and slower demand. For much of 2025, prices are below last year’s levels in parts of the country, reversing previous pandemic-era price surges.
**Interest Rates and Mortgage Affordability**
Mortgage rates are expected to moderate in 2025, improving affordability compared to the high rates seen in 2023-2024, though the lingering effects of past rate hikes will still dampen some market activity. This moderation should encourage more buyers to enter the market and help existing homeowners consider refinancing or moving.
**Demographic and Social Dynamics**
Increasingly, buyers are pooling resources—such as friends and family forming intergenerational or shared households—to afford homeownership amid economic uncertainties. This trend affects demand patterns, potentially increasing the number of buyers but shifting the types of homes sought.
**Construction and Supply Factors**
Innovations in construction methods, including 3D printing and factory-built components, are expected to speed building timelines and improve home quality, which could help address supply shortages over the longer term. Builders are advised to use 2025 as a slower period to prepare for expected growth in 2026 and 2027, indicating strategic holding or investment decisions in new construction are prudent.
**Impact on Stakeholders**
Homebuyers can benefit from increased choices and affordability, with more inventory and modestly lower or stable prices, along with moderately affordable mortgage rates. Homeowners (sellers) face a more balanced market requiring competitive strategies, while investors and builders have an opportunity to innovate and prepare for upcoming growth.
As the housing market in 2025 is a moving target, influenced by factors such as employment growth, housing supply, and government policies, staying informed on market trends, economic indicators, and interest rate developments is important for navigating the housing market. Being patient and flexible is necessary as the market evolves.
[1] National Association of Realtors [2] Zillow [3] Redfin [4] Freddie Mac [5] Realtor.com
1.енanalysis of the housing market in 2025 indicates a phase of adjustment, with key trends affecting buying, selling, and holding decisions for various stakeholders.
2.The single-unit housing market is projected to experience sluggish growth in 2025 but is expected to rebound with an approximate growth of 8.2% in 2026, while inventory levels remain below pre-pandemic levels.
3.Prices are expected to increase modestly in 2025, with the potential for a decrease in some areas due to increased inventory and slower demand.
4.Interest rates are expected to moderate in 2025, improving mortgage affordability, and encouraging more buyers to enter the market.
5.Demographic and social dynamics, such as multiple buyers pooling resources, are affecting demand patterns and potentially increasing the number of buyers seeking specific types of homes.
6.Builders are advised to strategically hold or invest in new construction over the longer term to meet the expected growth in 2026 and 2027, while remaining informed about market trends, economic indicators, and interest rate developments.
