Despite recent challenges, the U.S. housing market is poised for a resurgence in 2025, offering promising opportunities for buyers, sellers, and investors alike.
In 2024, existing-home sales dipped to 4.06 million units – the lowest since 1995- primarily due to elevated mortgage rates hovering between 6% and 8%. However, a shift is on the horizon. The National Association of REALTORS® (NAR) forecasts a rebound, projecting 4.5 million existing-home sales in 2025 and anticipating the 30-year fixed mortgage rate to average around 6%. This rate adjustment could enable approximately 6.2 million households to afford median-priced homes, marking a significant improvement in affordability.
Inventory levels are also showing positive trends. By December 2024, the number of homes available for sale increased by over 16% year-over-year, providing buyers with more options. This uptick in inventory, coupled with stabilizing mortgage rates, is expected to invigorate market activity.
Home prices continue to reflect the market’s resilience. The median existing-home price reached $404,400 in December 2024, a 6% increase from the previous year. This consistent appreciation underscores the enduring value of real estate investments.
First-time buyers are gradually re-entering the market, accounting for 30% of home purchases in November 2024, up from 27% the previous month. While still below the historical average of 40%, this increase indicates growing confidence among new entrants
Builders are responding to the demand by increasing new-home construction. NAR anticipates 1.45 million housing starts in 2025, predominantly single-family units. Notably, townhome construction surged, with single-family attached starts rising 27% in Q4 2023 compared to the same period in 2022, highlighting a shift towards more affordable housing options.
In summary, the housing market is on an upward trajectory. With anticipated mortgage rate stabilization, increased inventory, and robust construction activity, 2025 is shaping up to be a favorable year for real estate. Whether you’re considering buying, selling, or investing, the coming months present a window of opportunity to engage with a revitalizing market.
