2025 Housing Market: Is It a Good Time to Buy a House?

Home, they say, is where the heart is. As we approach 2025, many potential homebuyers are wondering if it's the right time to invest in a house. The housing market has been through a rollercoaster ride in recent years, with mortgage rates fluctuating and home prices experiencing both growth and decline. So, is 2025 the year to buy a house? Let's dive into the data and expert insights to help you make an informed decision.

Mortgage rates remain a crucial factor in determining affordability and housing demand. In 2024, nearly 86% of homeowners with mortgages had interest rates below 6%, down from nearly 93% two years ago. This decline indicates that more sellers are listing their homes due to various reasons, such as job changes, the need for more space, and the three Ds: death, divorce, and debt. As mortgage rates fall, affordability will improve, making it easier for buyers to enter the market.

However, the local picture varies widely, and affordability challenges will remain. Among the nation's top 50 metros, Hartford is expected to have the biggest bump in home values, with 4.2% growth projected from October 2024 to October 2025. In New Orleans, values are expected to decline 3.8% over the same period. Therefore, while inventory levels are expected to improve affordability and home sales in 2025, the impact will vary depending on the local market conditions.

Zillow forecasts 4.3 million sales of existing homes in 2025, up slightly from the 4 million expected to sell in 2024. This increase in sales is attributed to the expected increase in inventory and stabilizing mortgage rates. The Southwest is expected to join the Midwest and the South as regions tipping in buyers' favor, with more listings from homeowners who have been sitting on the sidelines and improvements in affordability as interest rates ease.

Lawrence Yun, NAR Chief Economist, predicts an uptick in home sales due to job growth. He forecasts a 9% increase in home sales for 2025 and a 13% increase for 2026. This recovery is expected to be greatly influenced by the effectiveness of job growth. With continued job additions across various sectors, potential homebuyers are more likely to explore their options in the housing market, as employment stability gives them the confidence to commit to a major purchase.

The expected economic conditions in 2025, such as job growth and wage increases, are likely to have a positive influence on home sales and affordability. Job growth will provide potential homebuyers with the confidence to enter the market, while wage increases will improve rent affordability and provide more disposable income for saving or making mortgage payments. The stabilization of mortgage rates will also make home financing more accessible to potential buyers.

However, it's essential to consider the regional variations in the housing market. Some markets like Hartford are expected to have a significant bump in home values, while markets like New Orleans may experience a decline in home values. Therefore, it's crucial to research the local market conditions before making a decision to buy a house.

In conclusion, 2025 may present an opportunity for potential homebuyers to enter the market, given the expected increase in inventory, stabilizing mortgage rates, and positive economic conditions. However, it's essential to consider the local market conditions and weigh the pros and cons before making a decision. As always, it's recommended to consult with a financial advisor or real estate professional to help you make an informed decision about buying a house in 2025.