Realtor.com expects a gradual improvement in housing market dynamics in 2025, which will be impacted more by broader economic factors than the change of administration.
Among its predictions for the coming year are home sales prices growing by 3.7%, mortgage rates remaining above 6% and rents staying virtually unchanged. In addition, inventory growth of single-family home starts is expected to grow 13.8% next year and existing for-sale home inventory will grow by 11.7%, the company said in its 2025 housing forecast.
This will bring the first balanced market in nine years, as months of supply is projected to improve from a 3.7-month average in 2024 to 4.1 months in 2025. Under four months is typically considered a seller’s market while four to six months of supply is considered a balanced market.
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"While President-elect Trump can work quickly with his administration to implement some regulatory changes, other policies that will affect housing, such as tax changes and broad deregulation, require the cooperation of other branches and levels of government," said Danielle Hale, chief economist, Realtor.com. "The size and direction of a Trump bump will depend on what campaign proposals ultimately become policy and when.”
According to some estimates, Trump’s proposal for regulation could add $90,000 to the cost of a new home. Trump also has said he will make more federal land available for homebuilding.
While mortgage rates will improve slowly next year, those in the marketplace will enjoy other buyer-friendly home conditions, including the highest for-sale inventory since December 2019, and a large percentage of sale inventory coming with price cuts. However, sellers will maintain some leverage thanks to limited inventory and strong demand in many areas. Meanwhile, whether buyers can afford to purchase in a higher interest rate environment remains a question mark, and longer selling times and price reductions are possible.
Overall, home sales are set to increase by 1.5% next year, to reach 4.07 million total.
California, New Jersey and Illinois had the highest concentration of markets that are vulnerable to declines based on home affordability, equity and other measures during the third quarter. Florida also has an increasing list of at-risk markets, but the South generally had the most clusters of less-vulnerable markets, according to a special housing market impact risk report by ATTOM.
Two-thirds of the 50 counties that are most exposed to potential fallbacks were in California, Florida, Illinois and New Jersey. This includes six counties in and around Chicago, five in or near New York City and four in Southern New Jersey. Thirteen were in California.
The least vulnerable markets were Virginia, Wisconsin, Tennessee, Montana and New Hampshire.
Counties were considered more or less at risk based on the percentage of homes facing possible foreclosure. The portion with mortgage balances exceeded estimated property values, the percentage of average local wages required to pay for major home ownership expenses on median-priced single-family homes and local unemployment rates.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
