Experts are watching mortgage rates and evaluating the current housing inventory.
Here’s what they have to say about the market health.
So far, that hasnt happenedand hopes are high that it wont.
Credit:STACY ZARIN GOLDBERG
First, many employees began working remotely.
These homeowners began buying or listing their current home for sale, causing a sudden boom in the market.
Still, interest rates remain high.
As we near the end of 2024, we’re seeing mortgage rates decline again.
As I expect this mortgage rate decline will continue, 2025 is likely to see improved home sales.
Will the Market Crash in 2025?
Local variations will likely occur, meaning some markets will still experience rising home prices.
It depends on inventory levels, buyer demand and local economies.
That’s good news for buyers who now have more options, with fewer bidding wars, he says.
And as the interest rate drops, homes will become more affordable to buyers.
These factors impact the housing market and home prices and are intertwined, Nicastro says.
But, mortgage rates arent the only factor experts are watching for signs of the markets health.
Higher interest rates ultimately raise the final home purchase price.
This reduces the affordability of homes and can lead to a slowdown in the market.
Similarly, she says high inflation negatively affects buyers purchasing power.
Lower unemployment rates generally boost consumer confidence and increase demand in the housing market, she adds.
The reverse is also true.
If the employment rates drop, consumer confidence also drops, and the housing demand decreases.
Finally, high inventory can drive prices down while low inventory can increase it.
Nationwide, homes were on the market for 7 days longer than one year ago.
Thebuild-up in affordable housing inventoryhas so far been most notable in the South.
What Happens Next?
Experts say that many parts of the country will continue to see price corrections as mortgage rates drop.
And if yourepreparing to list your home, Nicastro suggests relying on your real estate agent for pricing suggestions.
Those outcomes are much less common in today’s market.
If youre buying, be ready to pull the trigger when the timing is right, Nicastro adds.
Finally, both buyers and sellers should connect with an experienced realtor in their market for local insights.
They can help you get up to date on what’s going on in your market.
Both presidential candidates have recognized a need for additional housing supply in the U.S. market, Hale says.
Conversely, stricter lending standards can reduce affordability and lead to declining demand.
This could potentially exacerbate a market downturn.
Many factors will regionally impact the 2025 housing market outlook, Cooper says.
For example, regions with solid job growth will likely experience stability or even increases in housing prices.
Regions with multiple industries that help drive their economies are also less susceptible to a downturn.
Hale says there are things that buyers can do to improve their individual mortgage rate according toresearch from Realtor.com.
