T
he US housing market may experience a slight cooling in 2025, making it easier for some buyers to purchase a home. According to Redfin, stable or declining mortgage rates and increased housing inventory could contribute to this shift. However, the American dream of homeownership remains elusive for younger generations.

    Home prices have been elevated, mortgage rates are high, and housing supply is constrained, making it difficult for first-time buyers to enter the market. Climate change has also driven up costs such as insurance, HOA fees, and property taxes in high-risk states. Despite some positive predictions for 2025, homebuyers under 40 face significant challenges.

    Three factors could improve the housing market next year: slower home price growth, declining mortgage rates, and increased new housing inventory. Redfin economists predict median US home-sale prices will rise by 4% in 2025, while Goldman Sachs forecasts a 4.4% increase. Mortgage rates may also decrease, with Redfin expecting them to stay the same or drop next year.

    However, this improvement is unlikely to benefit younger homebuyers. First-time buyers are facing unprecedented difficulties due to high prices, limited inventory, and increasing costs. The median age of first-time homebuyers has risen to 38, and they now account for just 24% of the market. Boomers, on the other hand, have an advantage in the housing market, owning roughly half of the nation's net worth and homeowner equity.

    As boomers downsize or retire, they can tap into their accumulated home equity, while younger generations may continue to rent or live with family until well into their 30s. Redfin predicts that any new housing inventory will be snapped up by older buyers, further limiting opportunities for young homebuyers.