2024 was another year of rising house prices in the United States, as buyers faced a continued shortage of supply, leading first-time buyers to exit the market, while homeowners waited for mortgage rates to decrease to sell their properties.
Those struggling with high house prices and mortgages in the United States were pleased to hear experts predict that the appreciation of homes in 2025 will continue to slow down, but also disappointed to hear that prices will not stop rising.
After soaring during the pandemic, house prices experienced a brief decline from late summer 2022 to spring 2023, giving buyers a false sense of a turning tide. However, since then, prices have rebounded, reaching levels close to the peak of the pandemic.
As of November, the latest data on Redfin shows that the average selling price of homes in the United States is $430,010, a 5.4% increase compared to the same period in 2023. According to Zillow’s data, the typical home value in that month was $357,469, a 2.5% increase from November 2023.
The following are insights from experts interviewed by “News Weekly” on the outlook for the US housing market in 2025.
“For the coming year, we expect the rate of house price appreciation to continue to slow down,” said Matthew Walsh, an economist at Moody’s Analytics, to “News Weekly”. “By the end of 2025, we anticipate prices to rise between 1% to 1.5%.”
“This is largely due to ongoing subdued demand and inventory starting to recover, which I believe is a continuation of the trend that began in the latter half of 2024,” added Walsh.
Walsh noted that in the past two to three years, due to high-interest rates, homeowners have been delaying plans to sell their properties, but now they have “listed their properties for sale.”
He believes that as new constructions finally enter the market, increasing available inventory, this trend will continue.
Redfin’s outlook for 2025 is slightly pessimistic: the real estate brokerage firm predicts a 4% increase in house prices for the full year of 2025, as its experts foresee limited new housing supply entering the market.
Kara Ng, a senior economist at Zillow, told “News Weekly” that after a 3% rise in national house prices in 2024, prices are expected to increase by 2.2% in 2025.
Ng stated that the fluctuation in mortgage rates next year “is a major uncertainty.”
“There are indications that mortgage rates will decrease in 2025,” she added, “Although mortgage rates are notoriously difficult to predict, if rates fall below 6%, that would be a surprise.”
Similarly, Redfin projects that mortgage rates will hover around 7% for the entirety of 2025. The company stated in a report released in early December, “Average rates will fluctuate weekly throughout the year but average around 6.8%.”
Ng believes that buyers should “be prepared for a year of fluctuating mortgage rates.” She expects “significant fluctuations in mortgage rates throughout the year as the Federal Reserve and the market respond to new data.”
Redfin forecasts that the high house prices in 2025 will continue to prevent first-time buyers from entering the market, pushing them into or keeping them in the rental market. This will make 2025 a year for the rental market, as houses constructed during the pandemic will finally hit the market, increasing inventory. The increase in supply will in turn prompt landlords to offer more incentives to tenants.
Experts suggest that for many first-time buyers in 2025, homeownership may still be unattainable – even if house appreciation slows down as per Walsh’s expectations, while wages continue to rise.