T
he National Association of Realtors (NAR) has released its forecast for the 2025 housing market, predicting a modest 3% growth in national median home prices. While some may be concerned about the recent ups and downs in the market, NAR's Chief Economist Lawrence Yun believes that a "nuclear crash" is not on the horizon.

    Yun attributes this optimism to several key factors, including an anticipated rebound in home sales, easing mortgage rates, continued job growth, and low levels of distressed sales. He expects existing-home sales to increase by 6% and new-home sales to jump by 10% compared to 2024, which can put upward pressure on prices.

    Mortgage rates are a crucial factor in the housing market, and Yun predicts they will ease to around 6.4% by the end of 2025. This slight decrease from higher rates could make buying a home more affordable for some buyers, drawing them into the market. A healthy economy with 1.6 million new jobs added to the economy in 2025 also bodes well for the housing market.

    The persistent undersupply of homes, estimated at nearly 4 million nationwide, is another factor supporting price stability and growth. Realtor.com Chief Economist Danielle Hale notes that newly built homes often have slightly lower interest rates due to builder incentives, which can be an advantage for potential buyers.

    While a 3% price growth in 2025 seems reasonable, the actual trajectory of mortgage rates remains uncertain. If rates stay high, the predicted rebound in sales might not materialize, tempering price growth. Local market conditions, inventory levels, and buyer demand will also play a significant role in determining price movements at the local level.

    For potential buyers, it's essential to keep an eye on mortgage rate trends. If rates come down, it could be a good time to enter the market, but be prepared for increased competition. For current homeowners, a modest price increase is generally good news for home equity, while sellers should price their homes competitively based on local market conditions.

    Ultimately, predicting the future of the housing market is never an exact science, with many interconnected factors at play. However, the NAR forecast provides valuable insights into what experts are expecting, suggesting a degree of stability and continued moderate appreciation in the housing market.