Buying a house has proven to be a difficult task in recent years, and 2025 looks to be no exception. Real estate experts appear to agree that the combination of still high mortgage rates and low inventory will not improve buyer prospects. Renters may fare better, but the market will remain unpredictable and cold.
Experts have stated that mortgage rates are likely to remain above 6%, possibly even closer to 7%, depending on what policies the incoming administration is able to implement.
This new Republican administration does not inspire much confidence in the average American, and Redfin, a residential real estate brokerage and mortgage origination service, warns consumers that “any year in which the presidential administration changes is unpredictable, and this one may be especially unpredictable.”
The fact that 2024 was not a good year to buy a home is well known and, at this point, an understatement. Home prices continued to rise in 2024, despite rising mortgage rates and rising inventory, as those with large, expensive homes attempted to downsize and those who wanted to buy could not afford the entry price.
Redfin predicts a 4% increase in the median home-sale price in the United States in 2025, while Realtor.com predicts a slightly lower 3.7% growth. Realtor.com also anticipates an 11.7% increase in existing for-sale inventory next year.
However, Redfin predicts that supply will still fall short of demand, making homeownership out of reach for many people.
In fact, this is a growing trend because many homeowners, particularly the elderly, do not want to sell their homes at a loss and prefer to age in place rather than downsize to a home that better meets their needs, further limiting market options.
Renters will have the advantage in 2025
However, people still require a place to live, and if they cannot own, they must rent. And there is some mild good news in that regard, as both Redfin and Realtor.com predict that rents will remain flat, or even fall slightly, as a direct result of an impossible sellers’ market.
If we combine that with a slight increase in wages, rental prices may not appear as outrageous as they have been, particularly in major metropolitan areas.
Many sellers are deciding to hold on to their properties until the market heats up again, so many are being listed for rent, flooding the market with supply and forcing pricing to be restrained in order to meet demand. This may give those looking for a better place a chance to relocate without breaking the bank.
Mortgage rates won’t change much for houses
Even if home prices rise, mortgage rates may remain stable or even drop a few percentage points. Realtor.com predicts that rates will fall to the low-6% range by the end of the year, but because rising home prices will continue to be an issue, mortgage payments will remain relatively stable for those fortunate enough to be able to purchase.
Redfin is less optimistic about its prediction, believing that rates will remain near 7% throughout the year due to Trump’s proposed tariffs, which “could be inflationary, and enacting more tax cuts would increase the U.S. deficit, both of which would push mortgage rates up.”
However, if the situation does not unfold exactly as expected, Redfin sees hope for homebuyers, stating that “if the economy weakens and/or if plans for tariffs and tax cuts are dialed back,” mortgage rates may fall to the low-6% range.
Read Also :- Good news for retirees from Social Security – Official announcement of this important upgrade
