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Home Price Growth Is Slowing in 2025 – What Does That Mean for You?
Over the past few years, home prices have skyrocketed as demand has increased and supply has stiffened. It’s been a frustrating market for buyers, leaving many to doubt their chances of ever owning their own home. But the early weeks of 2025 have brought welcome news: the pace of home price growth is finally slowing down, and that’s a positive shift for anyone looking to buy a home.
Home Price Growth Drops to a Healthy Pace
At the national level, home prices are still rising, but at a much more normal, manageable rate compared to the double-digit spikes we saw in 2021 and 2022. Recent data from Case-Shiller show that in November 2024, the year-over-year increase in home prices was just 3.8% nationally, a clear drop from Pandemic rates:
What does this mean for you? For one thing, you’re less likely to experience the sticker shock that was common just a few years ago. The days of rapid price jumps that made it difficult to plan or pursue your purchase are behind us, and projected drops in mortgage rates this year paint an even more positive picture. More stable price growth also means that the home you buy today is still likely to appreciate in value over time, helping you build equity and secure your financial future.
Real Estate Is Local: Prices Vary by Market
While the national trend is pointing to more moderate price growth, keep in mind that all real estate is local. Some markets are still experiencing strong demand and upward price pressures, while others are cooling off or even seeing declines. For example, smaller, more affordable metro areas are still seeing significant demand and price increases. As CoreLogic Chief Economist Selma Hepp explains:
“Regionally, variations persist, as some affordable areas – including smaller metros in the Midwest — remain in high demand and continue to see upward home price pressures.”
Meanwhile, other regions, particularly those in southern markets, experienced slight month-over-month declines in November, according to Federal Housing Finance Agency (FHFA) data:
Differences like these highlight the importance of understanding what’s happening in your specific market. National averages can provide a general idea, but they rarely give you the whole picture. That’s where the knowledge and expertise of a local real estate agent can really help. They can help you understand local trends, identify opportunities, and create a buying strategy tailored to your needs and budget. Whether you’re buying in a high-demand market or one that’s cooling off, having a local expert on your side ensures you’re making more informed and confident decisions.
Conclusion
Home prices in early 2025 are growing at a more manageable pace, giving you the opportunity to plan your purchase without fearing the rapid price hikes of recent years. Connecting with a local real estate agent can help you navigate your area’s local home market, and make the best decision possible.
If you’re thinking about buying a home, 2025 is shaping up to be a great time to explore your options. Reach out to us today to connect with a local expert who can help you buy with confidence and find the perfect home for you.
2025 Housing Market Predictions: What Do the Experts Say?
Wondering how the housing market is expected to change in 2025? And more specifically, what it all means for you if you plan to buy or sell a home? As always, the best way to get that information is to consult the pros.
Experts are constantly refining their predictions in response to changes in the market and overall economy. Here’s the latest information on two key factors sure to influence the housing market in 2025: mortgage rates and home prices.
Will Mortgage Rates Come Down?
Mortgage rates remain one of the strongest factors influencing the market, and everyone is waiting for them to come down. The real question is: will they drop, and how quickly?
The good news is that mortgage rates are indeed projected to ease a bit in 2025, falling into the mid-6% range on average. But experts say not to expect a return to 3-4% mortgage rates, at least not this year. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:
“Are we going to go back to 4%? Per my forecast, unfortunately, we will not. It’s more likely that we’ll go back to 6%.”
Other experts agree with Yun’s 6% prediction. They’re forecasting rates could settle in the mid-to-low 6% range by the end of 2025 (see chart below):
But remember that the market can change quickly, and experts will revise their predictions as the new year continues. Market forecasts are based on what experts know right now. And since everything from inflation to economic drivers have an impact on where rates go from here, some ups and downs are still very likely. So, don’t get caught up in the most exact numbers and try to time the market. Instead, focus on the overall industry trend and on what you can actually control.
A trusted lender and a local agent partner will make sure you’ve always got the latest data and the context on what it really means for you and your financial goals. With their help, you’ll see that even a small decline in mortgage rates can help bring down your future mortgage payment when you decide to buy.
Will Home Prices Fall?
The short answer? Not likely. While mortgage rates are expected to ease, home prices are projected to keep climbing in most areas – but at a slower, more normal pace. If you average the expert forecasts together, you’ll see prices are expected to go up roughly 3% next year, with most of them hitting somewhere in the 3 to 4% range. But this is a much more typical and sustainable rise in prices compared to (see graph below):
If you’re thinking of buying in 2025, don’t expect a sudden drop to score you a big deal. That may sound disappointing if you’re hoping for home prices to come down, but this means you won’t have to deal with the steep increases we saw in recent years. You’ll also likely see any home you do buy go up in value after you get the keys in hand, and this can turn into a great investment over time.
Like many buyers, you might be wondering how it’s even possible that home prices are still rising. The answer all comes down to supply and demand. Even though there are more homes for sale now than there were in 2024, it’s still not enough to keep up with all the active home buyers on the market. As Redfin explains:
“Prices will rise at a pace similar to that of the second half of 2024 because we don’t expect there to be enough new inventory to meet demand.”
Keep in mind that the housing market is hyper-local, so this will vary by area. Some markets will see even higher prices, and some may see prices level off or even dip if inventory is up in that area. In most places though, prices will continue to rise as they usually do.
If you want to find out what’s happening in your local housing market, it always helps to lean on an agent who can explain the latest trends and what they mean for your homeownership plans.
Conclusion
The housing market is always changing, and 2025 will be no different. With mortgage rates likely to ease down to the 6% range and prices rising at a slower, more sustainable pace, it could be a great time to finally buy or sell. As always, it’s all about staying informed and making a plan that works for you.
If you’re in the market to buy or sell a home in 2025, let’s connect you with a local agent who can give expert advice on what’s happening in your area and make sure your next move is a smart one.
