T
he US housing market is poised for a rebound in 2025, with economists predicting stronger home sales and moderating but still increasing home prices. According to the National Association of REALTORS' (NAR) 2025 housing forecast, home buyers will have more success next year due to a greater number of homes coming up for sale, stabilizing mortgage rates, and continued job growth.

    The NAR predicts that existing-home sales will increase by 7-12% in 2025, with new-home sales rising by 11%. Median home prices are expected to rise by 2%, reaching $410,700. Mortgage rates are anticipated to moderate, hovering near 6% in both 2025 and 2026.

    Housing inventories have been increasing, with listings up about 20% annually in October. Economists expect this trend to continue in 2025 as more homeowners become motivated to sell due to stabilizing mortgage rates and improving market conditions.

    The expected increase in listings will also come from an increase in new home construction, which is projected to reach the historical annual average of 1.5 million units over the next couple of years. Builders are focusing on new-home construction in the exurbs and outer suburbs, a lasting shift that occurred during the pandemic.

    Mortgage rates are expected to set a new normal at around 6%, prompting more prospective home buyers to give up on ultra-low rates from the pandemic. The lock-in effect is likely waning, and life changes may take precedence over keeping a lower mortgage rate.

    Home prices will continue to rise but at a slower pace than in previous years. NAR predicts a 2% increase next year, reaching a $410,700 median existing-home price. Homeowners have accumulated record-high amounts of equity in real estate, which has put homeowners' median net worth surging above renters'.

    The housing market is expected to work more favorably for existing homeowners but will remain a challenge for first-time home buyers due to affordability issues. However, with home prices going up at a slower pace and income gains, affordability may marginally improve in 2025.

    Some housing markets are expected to rebound faster than others in 2025. The NAR has unveiled its Top 10 Housing Hot Spots for 2025, which can be found on their website.