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Realtor.com releases 2025 housing forecast

has released its 2025 housing forecast with data-driven predictions on home prices, inventory, mortgage rates, and more factors expected to have an impact on the market in the next year.

See a snippet from the report below:

Trends in Building and New-Home Sales
A relatively healthy economy powers steady consumer demand, and expectations for additional growth fuel optimism for both households and businesses. Household growth is expected to register 1.1% in 2025, adding 1.4 million households to the current total. As we’ll discuss below, ongoing hurdles to homebuying and the relative stability of rents will mean that more than half of net new households are renters, causing the homeownership rate to dip somewhat further (to 65.3% from 65.6%), but demand will grow for both for-sale and rental homes. As a whole, the macroeconomic backdrop will mirror trends in recent years. Above-trend real economic growth in 2024 (2.7%) is expected to trend back toward longer-run potential growth (2.3%). Inflation remains low, albeit stubbornly just above the Fed’s 2% target (2.1% to 2.4%).

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A still-solid economy keeps workers employed and productive. The unemployment rate is expected to remain low, registering just above 4%, helping push household income higher. The anticipated gain of 3.4% will just surpass inflation, helping to give the typical household a bit of welcome breathing room on their monthly budget. However, incomes don’t quite keep pace with home price gains. Nevertheless, the boost in buying power from moderating mortgage rates means that affordability improves modestly. The typical mortgage payment for a home with 80% financed with a 30-year fixed-rate mortgage is likely to increase by less than $5, or 0.2%, in 2025. Coupled with income gains, this will mean that the payment for a typical mortgage shrinks to 29.2% of income in 2025 from 30.1% in 2024, down from the annual high of 30.4% in 2023. Relative to historic norms, the cost of buying still takes up an outsized chunk of income, but it is moving in the right direction.

See the full report

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