5 predictions for the US housing market in 2025, according to Realtor.com

• Realtor.com forecasts that home prices will rise slightly in 2025.
• Researchers expect mortgage rates to come down next year but still remain above 6%.
• There's a silver lining: Increased inventory and new construction may offer buyers some relief.

The housing market in 2024 hasn't been kind to those looking for a home: The age of the typical first-time homebuyer increased by three years, mortgage rates stayed firmly above 6%, and some people felt it would be more affordable to keep renting than to buy.

Realtor.com's housing forecast predicts more of the same for 2025.

Danielle Hale, the chief economist at the real-estate listings and data site, said a "Trump bump" could affect the housing market, but it's not yet clear how.

"For now, we expect a gradual improvement in housing market dynamics powered by broader economic factors," Hale said in the forecast. "The new administration's policies have the potential to enhance or hamper the housing recovery, and the details will matter."

Most consumers care about what will happen to home prices and mortgage rates, which directly affect their ability to buy a house.

Here are five predictions for the housing market from Realtor.com.

1. Home prices increase slightly

According to the Federal Reserve Bank of St. Louis, the median home sale price nationwide has increased by 32% since 2019. Buyers are looking for some relief — which might not come in 2025.

The median home price in the US was $420,400 in the third quarter of 2024, though a year earlier it was slightly higher, at $435,400.

Realtor.com predicts that home sale prices will increase by 3.7% in 2025, representing an increase of about $15,000 from the current median sales price.

Home prices often drive economic trends. Higher home prices may cause buyers to expand their house hunts to more affordable parts of their states or the country, like the South.

2. Mortgage rates stay above 6%

The average 30-year mortgage rate has dipped slightly, to 6.81% in late November from 7.22% a year ago.

Rates dropped to historically low numbers in 2021, when they started the year at 2.65% — and they've mostly climbed since then.

The Fed's two interest-rate cuts — a 25-basis-point cut in November after a 50-basis-point cut in September — haven't significantly affected mortgage rates.

Realtor.com researchers don't expect mortgage rates to drop dramatically next year, projecting they'll stay above the 6% threshold. But they anticipate the number will be closer to 6.2% by the end of 2025.

3. Rents stay roughly the same

Realtor.com expects rent prices to drop by 0.1% nationwide.

For some, that may not be enough of a move to make a serious life change, like buying a home.

Realtor.com says construction trends suggest the rental stock should increase in all parts of the country but especially in the South. New homes and apartments in the South could lead to lower rents in some cities and states.

4. More new homes start construction

Realtor.com expects housing starts for new single-family homes to grow by 13.8% in 2025, reaching 1.1 million — which would be the most since 2006.

Property prices may not change significantly, but more new-construction homes on the market could give prospective buyers more chances to score a home.

"While more inventory means buyers will likely have more time to make purchase decisions in 2025, in any market, a fast-acting buyer will have a higher likelihood of making the winning offer," Hale said.

5. More homes go on the market

In some markets, baby boomers holding on to their homes have given younger buyers fewer options.

Realtor.com expects for-sale inventory in 2025 — meaning the number of actively listed homes, which encompasses newly built properties and resales — to increase by 11.7%.

That double-digit increase would represent the highest for-sale inventory since December 2019, Realtor.com said.

While the housing market overall may still favor sellers, more homes for sale can help buyers secure better deals and more concessions.