T
he US housing market is expected to rebound in 2025, according to Lawrence Yun, Chief Economist of the National Association of Realtors. Speaking at the Realtors Legislative Meetings, Yun forecasted a 6% increase in existing-home sales next year and an 11% jump in 2026. New-home sales are also projected to rise by 10% in 2025 and 5% in 2026.

    The median US home price is expected to grow by 3% in 2025 and 4% in 2026, while mortgage rates will average 6.4% in the second half of 2025 before edging down to 6.1% in 2026. Yun attributed the delay in recovery to the Federal Reserve's revised outlook and pause on interest rate cuts.

    The Fed had previously projected US GDP growth of 2.1% in 2024, but revised it downward to 1.7% in March 2025. Yun noted that mortgage rates have hurt the real estate market, making monthly payments unaffordable for new buyers. However, he suggested that rate cuts could be on the horizon once inflation is fully under control.

    Yun pointed to signs of recovery in housing demand, including rising mortgage applications and a "solid majority" of renters aspiring to become homeowners. He also cited labor market resilience and wage growth as positive economic indicators, with job growth stronger than before the pandemic and wages increasing 3.8% above inflation.

    While the short-term outlook remains fragile, Yun's projections suggest a slow but steady recovery could be underway if inflation cools and interest rates follow suit.