What should we pay attention to in the housing market in 2025?

Whether you buy or rent, housing doesn’t come cheap.

The median sales price for a single-family home in the U.S. was $437,300 in October, up from $426,800 the previous month, according to the latest data from the U.S. Census.

Meanwhile, the median U.S. rent price in October was $1,619, about the same, or up 0.2% year over year and down 0.6% month over month, according to online real estate brokerage Redfin.

It may be difficult to pinpoint exactly how the housing market will develop in 2025, but in a new report from online real estate brokerage firm Redfin, several economists predict what will happen next year. There is.

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“If the housing market was going to crash, it would have crashed by now,” said Darryl Fairweather, chief economist at Redfin. “The housing market has been very resilient even with interest rates rising this much.”

Here are five housing market predictions for 2025 from Fairweather and other economists.

The median asking price for homes in the U.S. could rise 4% in 2025, a similar pace to the second half of this year, according to Redfin.

Fairweather said the 4% annual pace is “normalization” compared to the growth acceleration last seen in 2020.

By early 2024, home price growth had slowed to pre-pandemic levels. In other words, prices were still rising, but they were not rising as fast as in previous years.

Despite predictions of slower growth, prices may still see some volatility.

In fact, CoreLogic economist Thelma Hepp said home price growth could remain flat or less than 1% well into the spring 2025 home buying season.

But Jacob Channell, senior economist at LendingTree, said the possibility that President-elect Donald Trump will implement some of his economic policies could cause home prices to rise significantly.

“There are some mixed signals at the moment in terms of what will or won’t happen to house prices,” he said.

General tariffs on foreign products and materials and mass deportations could lead to higher construction costs and delays in housing construction activity. Mr. Channell said that if less housing is built in a supply-constrained market, prices could rise significantly.

On a national level, median asking rents in the U.S. are likely to remain flat for the rest of 2025 as new rental inventory becomes available, according to Redfin.

“If rents stay the same and people’s wages continue to grow, that means people have more money to spend and more savings,” Redfin’s Fairweather said.

According to 2023 U.S. Census data, more than 21 million renter households are “cost burdened,” meaning they spend more than 30% of their income on housing costs.

As the rental market stabilizes, renters will have more power to negotiate with landlords. Experts say property management companies in some areas are already offering concessions such as a month of free rent, free parking spaces and waived fees.

But “it’s already December,” Channell said. Because fewer people are looking for apartments from late fall to winter, “rent prices generally fall during the colder months of the year.”

He said there could be competition in the rental market if high house prices and mortgage rates continue to keep potential buyers out of the sales market next year.

Also keep in mind that the typical rental prices you see will vary depending on what’s going on in your local market, Hepp explained.

For example, Austin, Texas, is a “major hub for multifamily construction,” which means a lot of new supply has been added to the city’s rental market, lowering rental costs, she said. According to a study by CoreLogic, rent prices in metropolitan areas fell 2.9% year-on-year.

In contrast, supply-constrained metropolitan areas such as Seattle, Washington, DC, and New York City are experiencing higher rent increases of 5% annually.

Redfin expects mortgage rates to average 6.8% in 2025 and remain in the low 6% range if the economy continues to slow.

But experts predict 2025 will be a “rocky” and “volatile” year for mortgage rates.

Policies such as tax cuts and tariffs could raise mortgage borrowing costs and put upward pressure on inflation.

“We are in some sense uncharted territory. It is very difficult to say exactly what will happen,” the LendingTree channel said.

Mortgage rates fell this fall on expectations for the first rate cut since March 2020. But borrowing costs rose again in November as bond markets reacted to Donald Trump’s election victory. Since then, mortgage rates have remained somewhat stable so far.

“We expect interest rates to be in the 6% range heading into 2025,” Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors, recently told CNBC.

Pent-up demand from buyers and sellers on the sidelines could fuel housing transactions next year.

“People have waited long enough,” Fairweather said.

About 4 million homes are expected to be sold by the end of 2025, an annual increase of 2% to 9% starting in 2024, according to Redfin.

Fairweather said the market is filled with “people who need to move on with their lives,” including buyers who have started new jobs and need a home that fits their lifestyle changes, and sellers who have delayed moving plans. It is said that the number is increasing.

More buyers are expected to enter the market next year, but the level of competition may not be as intense as in recent years, when bidding wars were the norm.

CoreLogic’s Hepp said other affordability factors, such as rising insurance premiums and property taxes, could come into play and slow competition.

“There will definitely be more buyers,” she said. “But I don’t think the competition is heating up to the level it’s been in the last few years.”

The risk of extreme weather and natural disasters can keep home prices fixed or slow down price growth in areas such as coastal Florida, California, and parts of Texas, where the risk of hurricanes, wildfires, and other disasters is high. Redfin predicts that this could slow down the market.

If you’re looking at a home with an affordable price tag in a high-risk market, be aware of potential complications.

For example, home insurance policies are difficult to obtain in some of these markets and tend to come with a hefty price tag. Redfin’s Fairweather said the economic impact of natural disasters can also be reflected in higher home maintenance and repair costs.

What’s even more difficult is that “every region of the country is vulnerable” because of changing weather patterns, she said. “Recently, atmospheric rivers have been running through California, causing multi-day floods, and those homes weren’t built for that.”

Florida has received a lot of attention for its hurricane risk, but unlike areas like the mountain city of Asheville, North Carolina, which was hit by Hurricane Milton earlier this year, the state is not immune to this natural disaster. We are better prepared.

“Insurance will probably increase pretty broadly because there’s a mismatch between what homes are built for and the climate we’re likely to face over the next few years,” she said.