2025 Real Estate Forecast: Key Trends and Insights

The housing market has faced a challenging couple of years, but there are signs of brighter days ahead. During the National Association of REALTORS® (NAR) NXT conference in Boston, Chief Economist Lawrence Yun and Deputy Chief Economist Jessica Lautz shared encouraging predictions for 2025 and beyond. From rising home sales to shifting buyer demographics, here’s what real estate professionals and clients can expect.

1. Home Sales Are Set to Rise

After a tough 2023 and 2024, NAR forecasts an uptick in home sales, fueled by job growth and improving market conditions. Yun predicts nearly 2 million new jobs will be added annually in 2025 and 2026, driving housing demand:

• 2025: Existing home sales to rise 9%; new home sales to jump 11%

• 2026: Existing home sales to rise 13%; new home sales to increase 8%

Additionally, rising inventory and pent-up demand—driven by life events like births, marriages, and relocations—will motivate more Americans to make a move.

2. Mortgage Rates to Stabilize

While mortgage rates have hovered between 6% and 7.4%, Yun anticipates rates to moderate toward the lower end of this range. However, a large budget deficit could prevent rates from dropping significantly. Factors like improved housing regulations or labor force growth could change this outlook.

The “locked-in” effect of homeowners with low mortgage rates (2-3%) will ease over time, Yun noted, as more life milestones prompt home transitions.

3. Home Prices to Increase Slowly

Home prices are still rising but at a more sustainable pace. After record-breaking equity gains, homeowners have built significant wealth, with the median homeowner’s net worth far outpacing renters’. Yun’s forecast for median home prices:

• 2025: $410,700 (up 2% over 2024)

• 2026: $420,000 (up 2% over 2025)

Increased housing supply is key to keeping home prices aligned with wages and improving affordability.

4. A New Buyer Demographic

Jessica Lautz highlighted shifts in today’s buyer profile:

• All-Cash Buyers Surge: 26% of home purchases are all-cash, with 31% of repeat buyers skipping mortgages.

• First-Time Buyers Get Older: The median first-time buyer age hit 38. Many rely on gifts, loans, or financial assets to save for higher down payments (9%, the highest in 30 years).

• Multigenerational Homes Rise: 17% of buyers are pooling resources to save costs, care for family, or accommodate young adults.

• City Living Gains Appeal: After a pandemic-driven suburban shift, buyers are returning to city centers in record numbers.

• Single Women Lead Solo Purchases: Single women accounted for 24% of home sales, far outpacing single men (11%).

What This Means for You

With a rosier outlook for home sales, moderating mortgage rates, and evolving buyer trends, the real estate market presents new opportunities. Whether you’re buying, selling, or investing, understanding these changes will help you stay ahead of the curve in 2025 and beyond.

Ready to make your next move? Let’s navigate this changing market together!