Projected Housing Market 2025

There are projected to be more home sales in 2025, with increased resale inventory,

more new-home starts, and the acceptance of mortgage rates near 7%.

Elevated mortgage rates, pent-up supply and demand, increased home sales, and

broader economic uncertainty are on the cards in 2025, according to housing market

forecasts from Bright MLS, Realtor.com, and Redfin. Additionally, the new

administration is expected to drive down regulatory costs and new housing starts are

expected to be positive in the 2025 calendar year.

Home Prices

Bright MLS, Realtor.com, and Redfin form a consensus that home prices will rise

between 3% and 4% annually in 2025. Realtor.com projects home prices will increase

3.7% while Redfin expects the median U.S. home-sale price to end 2025 4% higher

than in 2024. According to Redfin, prices will rise at a pace similar to the second half

2024 “because there will not be enough new inventory to meet demand.”

Bright MLS projects median home prices will increase 3.1% to $418,390, with “no

major risks evident” in the economy or housing market that could lead to a drop in

home prices during the 2025 calendar year. In some markets, though, a rise in

inventory and “historically fast price growth” will dampen 2025 price expectations.

Mortgage Rates

The three organizations each project 30-year fixed-rate mortgages will average

between 6% and 7% in 2025, though continued fluctuations are also expected. Bright

MLS projects average rates of 6.4% for the full year, with mortgage rates in the high-6s

in the first half of the year and low-6s in the latter half of the year. Inflation risks from

the Trump administration, including tariffs and immigration policy, could contribute

to rates remaining elevated, according to Bright MLS.

Realtor.com anticipates mortgage rates will average 6.3% in 2025 while Redfin project

rates will average 6.8% in 2025. Rates could decline more significantly if the economy

weakens or if plans for tariffs and tax cuts are dialed back by the new administration.

Home Sales, Inventory, and Starts

Each organization projects there will be more home sales in 2025 than in 2024. Bright

MLS forecasts existing-home sales will increase 7.5% year-over-year and inventory

levels will increase 12.5% compared to 2024. Buyers will perceive rates above 6% as

“the new normal,” and many who have been on the sideline will engage in the housing

market in 2025, according to Bright MLS.

Realtor.com forecasts existing-home inventory will increase 11.7%, home sales will

grow 1.5%, and months’ supply will improve to 4.1 months in 2025 from 3.7 months in

2024. Additionally, Realtor.com projects single-family housing starts will grow 13.8%

year-over-year, reaching 1.1 million homes.

Despite increases inventory and expectations that sales growth will be positive in 2025,

Redfin forecasts 2025 may be a renter’s market. The projection is rooted in the

expectation that the cost of homeownership will continue to rise while rental

affordability will improve. Additionally, there will be more new rentals coming on the

market in 2025, creating more supply than demand and potentially motivating

landlords to offer concessions to entice renters, Redfin projects. Gen Z individuals will

likely favor living with family or renting well into their 30s, opting to build wealth in

other ways, according to Redfin’s projections.

New Presidential Administration

Realtor.com anticipates the victory of President Trump as well as the Republican sweep

of both houses of Congress will result in “pros and cons for the housing market.”

“While President-elect Trump can work quickly with his administration to implement

some regulatory changes, other policies that will affect housing, such as tax changes

and broad deregulation, require the cooperation of other branches and levels of

government,” says Realtor.com chief economist Danielle Hale. “The size and direction

of a Trump bump will depend on what campaign proposals ultimately become policy

and when. For now, we expect a gradual improvement in housing market dynamics

powered by broader economic factors. The new administration’s policies have the

potential to enhance or hamper the housing recovery, and the details will matter.”

Redfin projects that fewer construction regulations will lead to more building in 2025,

though it will take longer for the increase in activity to improve affordability. The

organization suggests the Republican sweep will improve builder confidence that

regulatory burdens may ease during the Trump administration. Additionally, mergers

and acquisitions among large companies may be more common as the Federal Trade

Commission is likely to approve more deals, Redfin projects. As a result, the

consolidation seen in recent years in the real estate industry is likely to continue in

2025. However, the potential crackdown on immigration promised by the Trump

administration could have a significant negative impact on residential construction

activity, according to Redfin.

“Higher-income households and homeowners will likely fare better in the 2025

housing market than will entry-level and moderate-income buyers,” says Bright MLS

chief economist Lisa Sturtevant. “Metros where overall household incomes are lower

are more at risk of a weakening housing market, while higher-income metros—even

those where home prices are very high—are projected to see stronger price growth.”