Housing Market Predictions for 2025

If you’re thinking about buying or selling a house and wondering about the housing market, you’re not the only one. The real estate market has seen a lot of unusual trends in the past couple of years, so it makes sense that you’d want the latest market update before you make any major decisions!

Here’s the thing: Housing market predictions are about as reliable as weather forecasts. The real estate professionals make their best predictions based on data, but no one can know what’s going to happen with 100% accuracy.

Still, even though the housing market is uncertain, you can listen to what the experts are saying and make some pretty good guesses. Just remember—never let a market prediction control your housing decisions. Only your personal situation and finances should do that!

With that said, here’s the real estate market forecast.

 

Will Interest Rates Go Down in 2025?

Good news: Mortgage rates will likely continue going down in 2025! The Federal Reserve (aka the Fed) lowered the federal funds rate in November, and mortgage rates should continue going down in response to that cut.¹

And let’s not forget that mortgage rates have already fallen quite a bit. To be specific, the typical rate for a 30-year fixed-rate mortgage fell from 7.79% in October 2023 to 6.12% in October 2024. The rate for 15-year mortgages fell from 7.03% to 5.25% during the same time frame.² You have to love that, right? 

Now, 30-year and 15-year rates have both gone up a bit since September, but they’re still down a ton from the super high rates we saw in 2023—and they’ll probably keep going in that direction. Even though we may be a long way from rates returning to the 2–3% range we saw at the end of 2021, it’s still great to see things trending in the right direction.

Is Now a Good Time to Buy a House?

Like I said before, the market shouldn’t determine your decision to buy a house. If you’re prepared financially, then it’s a good time to buy a home—even if inventory is limited and interest rates are high. If you’re not financially prepared, it’s not a good time, even if there’s plenty of inventory and rates are down.

You’re ready to buy a house in 2025 if (and only if) you can check off these boxes:

• You’re debt-free.
• You have an emergency fund of 3–6 months of expenses.
• Your monthly house payment on a 15-year fixed-rate mortgage will be 25% or less of your monthly take-home pay.
• You have a down payment. A 20% down payment is ideal because you’ll avoid paying private mortgage insurance (PMI). But 5–10% is okay, too, if you’re a first-time home buyer. Just be prepared to pay PMI. And steer clear of FHA and VA loans—you’ll pay much more in fees with them.
• You can pay the closing costs up front without stealing from your down payment.

If you don’t meet these qualifications, it doesn’t matter if the market is in your favor. Buying a home would be a curse instead of a blessing. Take your time to get in a better financial position so you can buy a house the right way.

Find expert agents to help you buy your home.

If you are ready to buy, then it’s time to hire an agent and get to work! The best place to find an awesome real estate pro is our RamseyTrusted^® program. We only recommend agents who prioritize you and your goals—not their bottom line.

What’s the Average House Price?

The average home sales price in the U.S. is $501,100, according to the most recent numbers from November 2024.³ But it’s typically more helpful to look at the median sales price, which is $420,400.⁴

Why? Because a small group of super high- or low-priced houses can throw off the average and make regular homes seem more or less expensive than they really are (something to keep in mind as you watch the average house price fluctuate in 2025). The median price, on the other hand, is the number right in the middle of the lowest and highest prices.

Will the Housing Market Crash in 2025?

If you’re concerned about the housing market potentially crashing in 2025, you can put those worries to rest. Prices are not going to start drastically going down anytime soon. In fact, the Federal Home Loan Mortgage Corporation expects prices to grow in 2025.⁵

The main thing to know about the housing market is that home prices are determined by inventory (also known as supply) and demand. Here’s what you can expect in each of those areas.

Housing Inventory

Housing inventory simply refers to the number of houses for sale. When fewer houses are available, buyers are willing to pay more, and sellers have more leverage to up their asking price. Simply put—low inventory leads to higher home prices. It’s a big reason why buying a home has gotten so expensive.

When it comes to housing inventory for 2025, things are currently looking up! October 2024 marked the 12th straight month of inventory growth. Even better news: The number of homes on the market in October 2024 was 29.2% higher than a year earlier.⁶

Now, while inventory is increasing, it’s still nowhere close to pre-COVID levels. So you shouldn’t get your hopes up about seeing any kind of major price adjustment. But this is still a great sign because it means the market is getting healthier overall.

Buyer Demand

One way to gauge demand in the real estate market is by how many homes sell for more than their listing prices. In September 2024, that number was 28.6%.⁷

Overall, buyer demand has stayed steady over the last two years. Since 2022, demand has gone up during the summer and down during the winter (rinse and repeat). We could see demand increase in 2025, though, if interest rates continue falling.

What Does the 2025 Housing Market Mean for Buyers and Sellers?

Is It a Buyer’s Market?

In a buyer’s market, the number of homes for sale is more than the number of buyers. But since home supply is still low, it doesn’t look like there’ll be a buyer’s market anytime soon.

The good news is, the market isn’t as hot as it was in the past few years. If you’re looking to buy, you’ll have a few more options—and maybe less competition. Yes, prices are still high, but the frenzy is slowing down.

Is It a Seller’s Market?

A seller’s market is when demand for homes is higher than the supply of homes, which is still the case right now. If you’re planning to sell your house, you can expect to sell it pretty quickly and for close to your asking price—as long as your asking price is fair for the current market. (It’s easy to value your home based on happy memories and how much you loved living there, but a good agent will help you price it realistically.)

Will There Be a Lot of Foreclosures in 2025?

So far in 2024, foreclosures are slightly down—a trend that should continue in 2025. There were 87,108 foreclosures in the third quarter of 2024, which represented a 13% year-over-year decline.⁸

Here’s what that means for homeowners and home buyers:

• Homeowners: Since the market isn’t going to get flooded with foreclosures, you can rest easy, knowing your home isn’t going to tank in value because of a sudden increase in home inventory.

• Home buyers: If you’re waiting to find a great deal on a foreclosure, it’s not going to be easy. And keep in mind, buying a foreclosed home could come with its own set of potential issues. So make sure you do your homework on the house and know what you’re getting yourself into before you buy.

How to Buy or Sell With Confidence in Any Housing Market

I know buying or selling a house is a big deal, especially after all the craziness we’ve seen in the market over the last few years, but you’ve got this!

Yes, the cost of buying a house is higher than it’s ever been before. And yes, selling a home in 2025 will come with obstacles—like higher-than-normal interest rates and high home values pricing out a lot of would-be buyers. But just because buying or selling may be more difficult now than it was a couple of years back, it’s not impossible.

You still control your financial future. That includes real estate—no matter what’s going on in the market. And our team here at Ramsey always has your back.

If you want to learn even more about buying or selling a house, check out our all-new Real Estate Home Base! It’s full of super helpful articles, guides and calculators—basically everything you need to make confident decisions and reach your home goals. Think of it as your all-in-one real estate resource.