Zillow’s 2025 Housing Market Forecast: More Choices, More Power for Buyers
Zillow is predicting a more active housing market in 2025, with buyers having more options and negotiating power. Inventory is expected to increase, giving house hunters more to choose from—a welcome change after the tight inventory we’ve seen in recent years. While the median home price is projected to grow by 2.6%, existing home sales are set to rise to 4.3 million, up from 4.1 million in 2023 and just 4 million in 2024.
Affordability will remain a key issue, especially with mortgage rates expected to see ups and downs, much like we’ve experienced in 2024. It might be a rollercoaster ride, but for those ready to buy, 2025 could bring more opportunities to lock in a deal.
HousingWire’s Take: Slower Sales, Higher Prices
HousingWire is slightly less optimistic than Zillow, projecting 4.2 million home sales for 2025. However, they expect home prices to appreciate by 3.5%, which is slightly higher than Zillow’s forecast. A notable highlight? Inventory is expected to increase by 13%, giving buyers more breathing room in a market that’s been notoriously tight.
Fannie Mae’s Perspective: A 30-Year Low for Sales, but Hope on the Horizon
Fannie Mae predicts that 2025 will still feel the pressure of rising interest rates. Existing home sales are projected to grow by only 4%—a significant drop from their earlier forecast of 11%. The higher-rate environment will continue to reinforce the “lock-in effect,” where existing homeowners are hesitant to sell because they’re locked into lower mortgage rates.
Despite these challenges, Fannie Mae is optimistic about 2026, projecting a 17% rebound in existing home sales. So while 2025 may be tough, it could set the stage for a stronger recovery the following year.
National Association of Realtors: Is the Worst Finally Over?
According to the National Association of Realtors (NAR), “maybe the worst is over.” Pending home sales have already shown a modest 3% year-over-year gain as of September 2024, signaling that things may be turning around.
NAR predicts a 9% rise in existing home sales and an 11% jump in new home sales for 2025. Yun, NAR’s chief economist, expects mortgage rates to stabilize at the lower end of their current range (between 6.08% and 7.44%) over the next two years. While hopeful buyers waiting for significantly lower mortgage rates might be disappointed, Yun points to increased inventory and steady demand as reasons to remain optimistic.
And let’s not forget the pent-up demand: the U.S. population has grown by 70 million since 1995, but home sales have remained mostly at 1995 levels. Throw in milestones like 3.5 million babies born annually, 1.5 million marriages, and 700,000 divorces—along with millions of job changes—and it’s clear that the need for housing isn’t going anywhere.
