The last few years have been wild for the housing market, beginning with the COVID outbreak of 2019-21, which heavily disrupted global markets. 2023 saw record-high interest rates of 8%+, which have only begun to recede. 2024 showed signs of the market re-stabilizing, but 2025 will still offer new challenges and potentially new shifts in the market overall.
Haven Homebuyers is here to help you sell your home quickly and easily - but is 2025 a good year for buying or selling a home? Let's see what the market forecasts look like so far, along with some discussion of legal and political trends that may affect the housing landscape.
1. Basic Industry Trends
Number of Homes For Sale
One of the biggest issues with the current housing market is that demand outpaces supply by a wide margin. Estimates are that only one home is available for every 3-4 buyers, which will make life challenging for buyers and keep prices high.
The supply overall is increasing slowly. Here in California, home sales increased more than 20% in 2024 over 2023, and trends are similar around the nation. However, most analysts—including the National Association of Home Builders—believe that it will take the rest of the decade for demand and supply to even out. If this occurs, it will likely be due to new home construction rather than increased sales of existing structures.
Estimates for overall home sales in the US for 2025 tend to be in the 4 million range.
Median Home Price
With demand so high, prices are going to remain high.
Here in California, the pricing trend has been up and up for the last few years, with no signs of stopping. According to the California Association of Realtors (CAR), the median home price in 2023 was $814,000, and this year, it was $869,500. For 2025, they're expecting the median to top $900,000.
However, California has one of the most expensive housing markets in the nation. For the more extensive US, median prices in 2024 were just over $400,000. Higher prices in 2025 are also expected nationwide, with a growth rate of around 2%.
Average Time On Market
High demand and low supply are also significantly affecting the average time on the market, again to the sellers' benefit.
California has recently seen an extremely low time-on-market of only around a month, indicating extremely high demand and pressure on buyers to buy quickly. While this may be extended in 2025, you can expect a California home to sell rapidly to motivated buyers.
The numbers are less extreme nationwide, but they still indicate high demand. The overall average has decreased steadily for several years, with time on the market averaging around 61 days in 2024. With nothing to suggest, the trend will change, and time on the market will decrease by a few more days in the year ahead.
Interest Rates and Inflation
What will happen to interest rates in 2025 is one of the big questions weighing on industry analysts.
Currently, mortgage interest rates are around 6% for average buyers, down from the record high of 8% two years ago. This drop has helped spur more home sales but is still significantly higher than rates before the COVID outbreak.
There is little expectation that these rates will drop significantly in 2025, although some slight movement may be seen. Right now, any drop will help inspire more sales. The Federal Reserve is also expected to lower interest rates slightly in December 2024; however, this may not necessarily translate into lowered mortgage rates.
The Federal Reserve would like inflation to go down to 2% in 2025, but it's uncertain whether they will be able to accomplish that. Numerous trade policies are up in the air due to the recent election, making this very difficult to predict with any reliability.
Housing Markets Likely to See the Most Growth
Which markets are going to benefit most in 2025?
Realtor.com sees Texas and Florida as prime locations, particularly Dallas and Houston in Texas and Miami and the greater Tampa area in Florida.
That said, we wonder if the increasing difficulty obtaining home insurance in Florida will make buyers leery of investing in the state. Between rampant insurance fraud and increasingly damaging hurricanes, insurance companies are pushing prices beyond what many homeowners can afford. This could affect people's ability to obtain mortgages and reduce the safety of Florida property investments.
Many other booming markets could be seen as secondary cities, with people looking to be close to major metro areas but still far enough away to find better deals. Examples include Rockford, IL, Norwich, CT, and Trenton, NJ. In addition, "upstate" New York is seeing a housing boom, with Syracuse, Binghampton, Rochester, and Utica all doing well.
In California, San Diego and San Jose are becoming a new popular choice for home-buyers looking for a metro alternative to LA and San Francisco.
2. Major Issues That Will Affect 2025
The NAR Settlement
If there's one concrete event that will likely have a big impact on the home market in 2025, it will be the recent legal settlement which significantly changes how the National Association of Realtors (NAR) handles agent fees.
In short: Previously, buyer and seller agents were paid out of a set fee provided by the seller. This created a problematic situation where sellers were incentivized to offer hefty fees - cutting into their profits - to attract the attention of buyer agents. In addition, buyer agents were compromised because this situation incentivized them to show off the homes most likely to net them a hefty fee, not necessarily the best homes for their client.
Under the new rules, buyers and sellers will now independently negotiate fees with their agents. Those fees can be percentages, as previously standard, or set flat fees. For buyer agents, these fees must be negotiated and agreed to in writing before the agent can show any homes.
For the most part, this will benefit sellers, as it reduces their burden to pay fees. However, sellers with less-than-perfect properties - such as those needing repairs - may struggle since they've lost a tool to push more buyers towards their houses. After the NAR settlement, you'll have to work extra hard to sell fixer-uppers.
Buyers benefit somewhat as well, as they will have less fear of conflicts-of-interest causing problems with their agent. But they will now be paying a little extra in agent fees.
Federal Policies
The recent US election, which sent Donald Trump to the White House for his second term, could significantly impact the housing market. This will largely depend on whether he sticks to policies announced during the campaign and whether Congress follows them.
The biggest issue is undoubtedly his often-repeated pledge to deport millions of illegal immigrants. Without delving into the ethical and legal issues, the basic reality is that anywhere from 20%-40% of the home-building workforce is made up of undocumented workers. Should all those workers vanish, the costs of building new homes will almost undoubtedly rise, and it may even constrict the number of homes built. This would harm recovery of the supply/demand balance in the housing market.
Another policy with implications for the housing market is the proposed tariffs on Canada and Mexico and increased tariffs on Chinese goods. Tariffs almost inevitably lead to inflation in the affected markets. If those tariffs target materials associated with construction, such as lumber, that too could drive up the cost of new homes. Depending on the impact on overall inflation, it could also reduce buyers' ability to afford existing homes.
We must stress this is speculative. The impact will be seen once President Trump re-takes office in January 2025 and attempts to implement policies.
The Bottom Line: What This Means For Home Buyers and Sellers
So what does all this mean for you?
If you're a seller... 2025 could be a great year. Prices are high and trending higher, while low supply ensures that homes stay on the market for a minimal time. The recent NAR settlement will also reduce some of your selling costs, allowing you to see another 3%-5% in profit compared to costs before the settlement.
Be aware, though, that moving a house quickly could still be a challenge, especially for those whose properties may lack instant curb appeal. You'll need to budget time and money for staging, presentation, pictures, video, etc. You may also need to invest extra money into repairs or other renovations to make the property appealing, which will cut into your profits. Ultimately, the longer it goes unsold, the more money you'll lose over time.
If you're a buyer... 2025 may be better treated as a "watch and wait" year unless you have a pressing need to buy. It's still a sellers' market right now, and combined with still-high mortgage interest rates, you'll be paying a premium for homes in most areas. If you are in the market, look outside the standard metro areas for better bargains - before someone else snatches them up. Otherwise, the buyer situation will probably be better in 2026, especially if the supply of homes begins to rebound.
Need To Sell Fast? Haven Homebuyers Can Help!
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Whether you need cash fast, you've inherited a home you don't want, or a house has too many defects to sell easily - such as from rowdy renters - we make fair, reasonable offers to take the property off your hands. With Haven Homebuyers, you could potentially close the deal in less than a week!
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