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Will housing prices in the U.S. rise or fall in 2025? Everyone, from your neighbors to friends, seems to have an opinion—but how reliable are they?
Let’s dive into insights from 12 experts and uncover a solid consensus.
This article gives you valuable insights, but remember, it’s not and will never be investment advice. We pull data from a range of sources to provide you with the most accurate picture possible, yet we can’t guarantee complete accuracy. Markets are difficult to predict. Make sure to do your own research and consult a professional before making any financial moves. Any risks or losses are your own responsibility.
1) Bank of America forecasts a modest 0.5% decline in U.S. home prices for 2025
Bank of America predicts home prices will rise by 5% in 2025 and dip slightly by 0.5% in 2026. Actually, as we will see in this article, they are the only one who think it will decrease.High demand, low supply, and elevated mortgage rates keep the housing market "stuck."
The main issue is affordability. Many homeowners with low mortgage rates won’t sell, limiting supply. This "lock-in effect" keeps inventory tight, leaving first-time buyers unable to enter the market as prices remain high.
New home construction offers little relief. Builders are cautious, and housing starts are stagnant. Without significant increases in construction or policy changes, the shortage will likely persist, keeping prices elevated.
For aspiring homeowners, the advice is patience. The "lock-in effect" may last another 6–8 years. Economic shifts like lower inflation or reduced mortgage rates could improve affordability but will take time.
Current homeowners gain wealth from rising property values, widening the gap between them and buyers. Those locked out of the market miss opportunities for wealth-building. This divide worsens long-term financial challenges for non-owners.
Sources: ABC15, CNN Business
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2) Moody's Analytics forecasts a modest 0.3% increase in U.S. home prices for 2025
Moody's Analytics predicts that U.S. home prices will rise slightly by 0.3% in 2025.
This small increase reflects concerns about housing affordability.
During the pandemic, home prices surged, and now higher interest rates and inflation have made it harder for many people to afford a home.
These challenges are likely to keep price growth slow for now.
Sources: Moody's, Norad Real Estate
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3) Zillow's latest forecast anticipates a 0.9% increase in U.S. home values over the next 12 months, extending into 2025
Zillow's latest forecast (as of November 2024) anticipates a slowdown in home value growth, driven by falling mortgage rates and a growing supply of homes.
This increased inventory is easing price pressures, creating favorable conditions for buyers.
Home values are projected to rise by 2% in 2024 and 0.9% over the next 12 months, as new listings continue to outpace sales, tempering price appreciation.
Source: Zillow Research
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4) CoreLogic's Chief Economist projects U.S. home price growth slowing to 2%, citing high borrowing costs and buyer hesitancy
In a recent analysis, CoreLogic's Chief Economist, Selma Hepp, projected that U.S. home price appreciation will slow to an average of 2% over the next year.
This forecast is detailed in CoreLogic's "US Home Price Insights – November 2024" report, which indicates that home prices are expected to increase by 2.3% year-over-year from September 2024 to September 2025.
The anticipated deceleration in home price growth is attributed to several factors.
First, higher borrowing costs have reduced affordability, leading to a decline in buyer demand. Also, mixed economic signals have contributed to market hesitancy.
Finally, despite slight improvements in affordability due to temporary declines in mortgage rates, many potential buyers are opting to wait for more favorable conditions, contributing to the current stagnation in home price growth.
4) The National Association of Realtors expects existing-home prices to increase by just 2% year over year by the end of 2025 in the U.S!
The National Association of Realtors (NAR) predicts a 3.8% rise in existing-home prices by the end of 2024 and an additional 2% by the end of 2025, driven by several key factors.
Limited housing inventory is pushing prices upward. However, NAR expects increased home construction and listings to gradually ease this pressure, slowing price growth.
Also, stable mortgage rates near 6% are anticipated, supporting steady demand and moderate price appreciation.
Finally, stable employment and wage growth are expected to sustain buyer confidence and purchasing power, maintaining demand.
Source: The National Association of Realtors
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5) Freddie Mac forecasts that U.S. home prices will increase by 2.1% in 2025
Freddie Mac expects home prices to keep rising, though at a slower pace.
With mortgage rates likely to cool, more buyers, especially first-time buyers, could enter the market. However, the lack of homes for sale will still keep inventory tight, as many homeowners don’t want to give up their low mortgage rates.
Because of this, for them, home prices are expected to increase by 2.1% in 2024 and 0.6% in 2025.
The bottom line: demand will stay strong, but limited inventory will keep prices from dropping.
Source: Freddie Mac
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6) The Mortgage Bankers Association believes that U.S. home prices could rise by 2.7% in 2025
The Mortgage Bankers Association (MBA) anticipates that home prices will increase by 3.9% in 2024. Looking ahead to 2025, they expect the growth rate to slow to 2.7% year-over-year.
The Mortgage Bankers Association (MBA) bases its predictions on several key factors, including the overall economic environment, assessed through GDP growth, employment rates, and consumer spending.
They also analyze housing market trends, such as inventory levels, mortgage applications, and home sales, to understand supply and demand.
Additionally, they consider current and projected mortgage rates, as these play a significant role in home affordability and buyer demand.
Sources: The Mortgage Bankers Association, Business Insider
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7) Fannie Mae projects U.S. home price growth at 3.0% for 2025
Fannie Mae projects U.S. home price growth at 6.1% for 2024 and 3.0% for 2025, based on their Home Price Expectations Survey (HPES).
This survey gathers insights from over 100 housing experts and uses the Fannie Mae Home Price Index (FNM-HPI) as a benchmark.
In July 2024, their Economic and Strategic Research (ESR) Group noted stronger-than-expected price growth in Q2.
The slower growth forecast for 2025 reflects potential market shifts, such as increased housing inventory or changing buyer demand, influenced by supply, mortgage rates, and economic conditions.
Sources: Fannie Mae, Fannie Mae
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8) Morgan Stanley predicts U.S. home prices will rise 3% in 2025
Morgan Stanley predicts home prices will rise 3% in 2025, outperforming their 2024 projections.
Lower mortgage rates and limited housing inventory are expected to drive this increase, supported by steady demand and new home construction.
Slowing inflation and falling treasury yields should improve affordability, creating favorable conditions for long-term real estate investments. These insights highlight the market’s resilience and potential for steady returns.
Sources: Morgan Stanley, Norada Real Estate
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9) HousingWire anticipates U.S. home-price appreciation of approximately 3.5% for the calendar year 2025
HousingWire forecasts U.S. home prices to rise by 3.5% in 2025, reflecting a steady, more balanced housing market compared to previous years. This moderate growth is influenced by key trends shaping the real estate landscape.
Mortgage rates are expected to ease slightly, ranging between 5.75% and 7.25%. Lower rates could make financing more accessible, encouraging more buyers to enter the market.
Housing inventory is projected to grow by 13%, reaching about 800,000 single-family homes by October 2025. This increase in supply may help balance demand and keep price growth steady.
Economic stability with moderate growth and a low chance of recession is predicted. While price appreciation has slowed from the rapid increases of recent years, the forecasted 3.5% rise suggests a stabilizing market, not a downturn.
Source: HousingWire
10) Goldman Sachs projects a 4.4% rise in U.S. home prices in 2025
Goldman Sachs has projected that U.S. home prices will increase by 4.4% in 2025.
This forecast is based on expectations of Federal Reserve interest rate cuts and a robust underlying economy. The anticipated reduction in mortgage rates is expected to enhance affordability, thereby supporting continued price growth.
However, it's important to note that housing affordability remains a significant concern, with current levels being the lowest on record.
Goldman Sachs suggests that a gradual improvement in affordability may occur over the next five years, contingent on factors such as declining mortgage rates, income growth, and moderated home price appreciation.
Sources: Goldman Sachs, Marcus, Business Insider
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11) Capital Economics forecasts a 5.0% rise in U.S. house prices for 2025, exceeding consensus estimates
This optimism stems from expectations of falling mortgage rates, which could drop from 4.8% now to below 4.0% by late 2025, as the Bank Rate may decline more than anticipated.
Lower borrowing costs would boost affordability, allowing previously priced-out buyers to reenter the market. Mortgage approvals are projected to rise 12% in 2025, with total transactions increasing by 8%.
Buyers are also expected to take advantage of reduced rates to secure larger loans, further supporting price growth.
Following a modest 1.0% increase in 2024, house prices are predicted to rise 5.0% in 2025 and another 4.0% in 2026, driven by improved affordability and stronger demand.
Source: Capital Economics
11) First American Financial Corporation's Chief Economist says a housing shortage will likely keep prices steady in 2025
Mark Fleming, Chief Economist at First American Financial Corporation, says there aren’t enough homes for sale, so prices probably won’t drop much in 2025.
This perspective aligns with his previous analyses, where he noted that limited housing inventory continues to exert upward pressure on prices, even amid fluctuating demand.
Fleming's insights suggest that, despite potential economic shifts or changes in interest rates, the fundamental issue of inadequate housing supply will sustain price levels.
This ongoing imbalance between supply and demand underscores the challenges faced by prospective homebuyers and the importance of addressing housing shortages to achieve market stability.
Source: First American
11) Bright MLS’ Chief Economist Lisa Sturtevant says home prices are unlikely to drop much by 2025
Lisa Sturtevant, Chief Economist at Bright MLS, sees no signs of substantial national home price declines in 2024 or 2025. This outlook reflects a persistent imbalance between housing supply and demand.
A long-standing housing shortage, driven by underbuilding and rising construction costs, has kept prices elevated. Limited supply, even amid fluctuating mortgage rates, prevents significant drops.
While some regional adjustments may occur, a strong labor market and steady demand are expected to stabilize prices nationwide. Sturtevant predicts resilient home prices through 2025.
Sources: Bright MLS, New York Post
12) ResiClub reports an average forecast of a 2.5% increase in U.S. home prices for 2025
To wrap up, a shout-out to Resiclub for their diligent work in compiling and averaging forecasts from multiple leading sources, including many cited in this article.
The breakdown includes higher-end projections, such as Goldman Sachs at 4.4%, and more conservative estimates, like Moody’s at 0.3%.
Their 2.5% projection for 2025 provides a clear, synthesized view of the housing market's future, grounded in expert analysis and diverse perspectives.
Source: Fast Company
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So, will U.S. housing prices rise in 2025? Yes, they will!
After reviewing insights from various experts, it's clear that U.S. housing prices are expected to rise in 2025. The consensus among the forecasts is a moderate increase, with most predictions falling between 0.3% and 5.0%.
For instance, Moody's Analytics predicts a slight increase of 0.3%, while Capital Economics is more optimistic, forecasting a 5.0% rise. The average forecast, as reported by ResiClub, is around 2.5%. This suggests a general expectation of growth, albeit at a slower pace than in previous years.
Key factors influencing these predictions include limited housing inventory, stable mortgage rates, and economic conditions. While affordability remains a concern, the anticipated easing of mortgage rates could help more buyers enter the market, supporting price growth. So, if you're considering buying or investing, 2025 might be a year of steady, albeit modest, appreciation in home values.