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The US housing market will keep shifting in 2025, according to Zillow.
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The real estate firm has some predictions for what the market could look like next year.
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Homebuying activity should pick up after a long slump, despite choppiness in mortgage rates, the firm said.
Between stubbornly high mortgage rates and elevated prices, home buyers had a tough time navigating the housing market in 2024, but more changes could be coming next year, Zillow says.
In a recent outlook, the real estate listings site forecast a handful of developments for next year’s housing market, which they noted is still in the process of normalizing since the pandemic.
There are signs that demand and inventory of existing homes are both rising. Existing home sales rose 2.9%% year-over-year in October, the first annual increase in three years, the National Association of Realtors said.
The average home value, meanwhile, climbed to $359,099 in October, up 2.6% annually, according to Zillow’s Home Value Index. The rate on the 30-year fixed mortgage edged up to 6.84% last week, per Freddie Mac data.
“Zillow predicts a more active housing market and more buyers gaining the upper hand in 2025, but those hoping to buy — or even refinance — should buckle up for a bumpy ride and stay ready to move when conditions are right,” Skylar Olsen, Zillow’s chief economist, wrote in a note.
Here are four predictions Zillow has for next year’s market.
The housing market is slowly becoming “unstuck,” Olsen said, a trend that will continue as home prices edge up at a “modest” pace.
The firm predicts home prices will rise 2.6% in 2025, while existing home sales will notch 4.3 million, up from the expected 4 million sales expected this year.
“While affordability challenges will remain, buyers should expect more homes on the market, meaning more time to consider their options and more leverage in negotiations,” Olsen added.
Zillow predicted that mortgage rates will bounce up and down throughout next year.
The firm pointed to recent changes in the 30-year fixed mortgage rate, which fell earlier in the year before climbing to nearly 7% as markets adjusted their expectations for borrowing costs amid sticky inflation and a robust economy.
“More swings like this are expected in 2025, with refinancing sprints occurring during the dips, Olsen added.
Most “buyers’ markets” in the US are currently located in the Southeast, Zillow data shows. However, there’s a chance buyers could find more opportunities in the Southwest next year, the firm predicted, thanks to more inventory in the region becoming “unstuck” and attracting homebuyers.
