realestate

Forecasting a Mixed Outlook for 2025

NAR's economic summit panelists predict a better year overall, with several wildcards influencing the market.

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conomists at NAR's economic summit expressed optimism about the real estate market in 2025, but also highlighted several wildcards that could impact its trajectory. Key takeaways from the discussion include:

    Mortgage rates are expected to remain elevated in 2025, hovering around 6-6.5% throughout the year, due to broader economic factors such as inflation and rising national debt.

    Home sales predictions vary widely, with Lawrence Yun forecasting a significant increase to 4.5 million existing home sales, while others predict slower growth or even declines. The uncertain direction of rents is also a factor in these forecasts.

    The lending sector may see some improvement in 2025, with Mike Fratantoni anticipating a 20% increase in mortgage origination volume. However, this could be offset by softer rent prices and fewer first-time buyers.

    Home prices are expected to rise at a slower rate than previous years, particularly if inventory continues to increase. NAR's forecast is for the median home price to go up 2% in 2025 and again in 2026.

    The Trump administration's proposed policies pose significant wildcards for the market, including potential tariffs on building materials and deportations of immigrants. However, builders may benefit from tax cuts and fewer regulations, leading to increased optimism about 2025.

Weather forecast graphic showing mixed outlook for 2025.