N
AR Chief Economist Lawrence Yun shares his predictions for the housing market through 2025. After a sluggish summer, home sales may be on the mend. The National Association of REALTORS' Pending Home Sales Index jumped 7.4% in September compared to August and was up 2.6% from last year.

    Contract signings rose across all regions as buyers took advantage of lower mortgage rates and more inventory choices. Yun expects further gains if the economy continues to add jobs, inventory levels grow, and mortgage rates hold steady. He predicts sales of newly constructed and previously owned homes could rise by 10% in each of the next two years.

    However, existing-home sales hit a 14-year low in September due to high prices. Buyers found more inventory options last month, with housing inventory up 23% compared to a year ago. The Federal Reserve's interest rate cut also helped bring mortgage rates down, creating some urgency among home buyers.

    Mortgage rates have since moved upwards, averaging 6.54% last week. Yun believes home sales will continue to climb as home affordability improves. He predicts existing-home sales will increase to 4.47 million in 2025 and over 5 million in 2026. Home price appreciation is expected to slow down, with the median sale price increasing to $410,700 in 2025 and $420,000 in 2026.

    Yun also forecasts falling mortgage rates, with the 30-year fixed-rate mortgage decreasing to 5.9% in 2025. However, he expects mortgage rates to increase to a 6.1% average by 2026.