T
he US housing market continues to face affordability challenges, with median sales prices reaching $437,300 in October and rent prices averaging $1,619 nationwide. Despite these high costs, economists predict that the housing market will remain resilient in 2025, with several key trends expected to shape the industry.

    Home price growth is anticipated to return to pre-pandemic levels, with a predicted 4% annual increase in median asking prices. However, this growth may be volatile, and some experts warn of potential flat or even negative home price appreciation in certain areas. The possibility of President-elect Donald Trump enacting policies that drive up construction costs and slow home-building activity could also impact the market.

    Rent prices are expected to remain relatively stable, with a national median asking rent price staying flat over the course of 2025. This stability is attributed to new rental inventory becoming available, which will give renters more negotiating power with landlords. However, local markets may experience varying trends, with areas like Austin, Texas seeing declining rent prices and cities like Seattle experiencing high growth.

    Mortgage rates are also expected to be a key factor in the housing market next year, with Redfin forecasting an average rate of 6.8% in 2025. Experts warn that borrowing costs could spike if policies like tax cuts and tariffs are enacted, putting upward pressure on inflation.

    Despite these challenges, pent-up demand from buyers and sellers may drive home transactions next year, with about 4 million homes expected to be sold by the end of 2025. However, competition in the market is not anticipated to reach the same level as recent years, due to factors like rising insurance costs and property taxes.

    Climate risks are also expected to impact the housing market, with areas prone to natural disasters seeing slower price growth or even decreased home values. Homeowners in high-risk markets should be aware of potential complications, including higher insurance premiums and increased maintenance costs.