The US housing market has been on a rollercoaster ride, with 2024 presenting challenges like high mortgage rates and elevated home prices. However, according to Zillow, the tide may turn in 2025, bringing shifts that could reshape homebuying and selling experiences.
Here’s what Zillow predicts for the housing market next year and what it means for buyers and sellers alike.
1. Home Sales Are Expected to Rise
The housing market appears to be thawing from its prolonged freeze, a trend Zillow expects to continue in 2025. Home prices are predicted to climb at a modest pace of 2.6%, while existing home sales could increase to 4.3 million from the estimated 4 million in 2024.
This shift could benefit buyers, with more homes expected to hit the market. As inventory rises, prospective buyers will have more time to consider their options, potentially gaining negotiating power. Despite affordability challenges lingering due to elevated prices and mortgage rates, the increased supply should ease some of the pressure.
2. Mortgage Rates Will Be Volatile
Mortgage rates are projected to fluctuate throughout the year, mirroring trends seen in 2024. The 30-year fixed mortgage rate, for instance, has oscillated between falling early in the year and nearing 7% later due to market reactions to economic developments.
Zillow foresees similar swings in 2025. While rate dips could provide opportunities for refinancing or locking in better deals, the unpredictability means buyers will need to remain vigilant and prepared to act swiftly during favorable periods.
