The US housing market is expected to face significant challenges in 2025, with experts predicting a slow but steady recovery from the current slump. Americans who locked into ultra-low mortgage rates during the pandemic have little incentive to move into new homes and take on higher borrowing costs.
According to Zillow’s chief economist, Skylar Olsen, the difficulties of next year will be similar to last year, with homeowners facing financial pressures due to rising home insurance premiums and inflation-caused repair costs. Borrowing costs are also expected to remain high, with mortgage rates predicted to stay above 6% for all of 2025.
The median existing-home sales price rose to $406,100 in November, the 17th consecutive month of year-over-year price increases. This has made homeowners richer on paper but also makes it increasingly difficult for renters to save money for a down payment.
Economists expect a slow easing of rate pressures in 2025, with major life events like having children or getting a job in a new city requiring people to put their homes for sale and move. However, home price growth is expected to continue, albeit at a slower pace.
Location plays a significant role in determining home prices, with Southern states likely to see steeper cuts than other markets. The new Realtor rule changes have also taken effect, but it’s unclear how much they will affect buyers.
The federal government can play a role in easing the burden of housing costs through legislation. Republican lawmakers may try to increase affordable housing availability through tax credits during President-elect Donald Trump’s administration.
Overall, 2025 is expected to be a challenging year for the US housing market, with high borrowing costs and slow economic growth. However, with the right policies in place, experts predict a gradual recovery.
Source: https://edition.cnn.com/2024/12/30/economy/what-to-expect-housing-market-2025/index.html