Here’s what to watch out for in the 2025 housing market

By Finance News On Dec 9, 2024

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Housing is not cheap — whether you’re buying or renting.

In October, the median sales price for a single-family home in the U.S. was $437,300, up from $426,800 a month prior, according to the latest data by the U.S. Census.

Meanwhile, the median rent price in the U.S. was $1,619 in October, roughly flat or up 0.2% from a year ago and down 0.6% from a month prior, according to Redfin, an online real estate brokerage firm.

While it can be difficult to exactly pinpoint how the housing market is going to play out in 2025, several economists lay out predictions of what’s likely to happen next year in a new report by Redfin, an online real estate brokerage firm.

“If the housing market were going to crash, it would have already crashed by now,” said Daryl Fairweather, chief economist at Redfin. “The housing market has been so resilient to interest rates going up as high as they have.”

Here are five housing market predictions for 2025, according to Fairweather and other economists.

Home price growth will return to pre-pandemic levels

The median asking price for a home in the U.S. will likely rise 4% over the course of 2025, a pace similar to that of the second half of this year, according to Redfin.

The 4% annual pace is a “normalization” compared to the accelerated growth last seen in 2020, said Fairweather.

Earlier in 2024, the rate at which home prices grew slowed down to pre-pandemic levels. In other words, while prices were still rising, the speed of price growth was not as fast as it was in previous years.

Closing the Deal with the Property Brothers

Despite predictions of growth slowing, there may still be some volatility in prices.

In fact, home price appreciation might stay flat, or less than 1%, going into the 2025 spring home buying season, said Selma Hepp, economist at CoreLogic.

But the possibility of President-elect Donald Trump enacting some of his economic policies could drive home prices much higher, said Jacob Channel, senior economist at LendingTree.

“We kind of have some mixed signals right now in terms of what may or may not happen to home prices,” he said.

General tariffs on foreign goods and materials as well as mass deportations could result in higher construction costs and slower home-building activity. If fewer homes are built in a supply-constrained market, prices might grow much higher, said Channel.

Flattening rents, with more room to negotiate

At a national level, the median asking rent price in the U.S. will likely stay flat over the course of a year in 2025, as new rental inventory becomes available, according to Redfin.

“If rents are flat, and people’s wages continue to grow, that means people have more money to spend,” Redfin’s Fairweather said, as well as increase their savings.

More than 21 million renter households are “cost-burdened,”…