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Housing Predictions for 2025: What to Anticipate in the Year Ahead

Homebuyers have had a rough couple of years. However, the housing market is expected to improve a bit for buyers and those hoping to refinance their mortgages in 2025.

Mortgage rates are expected to slowly come down. That should make buying a home more affordable.

“We’re looking for a reprieve in inflation and in mortgage rates,” said New American Funding Chief Investment Officer Jason Obradovich.

In addition, more homes are expected to go up for sale in the year ahead. That should lessen competition (and heated bidding wars), keep prices at least somewhat in check, and lead to more home sales.

“While more [housing] 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,” said Realtor.com Chief Economist Danielle Hale in a statement. “For this reason, it’s wise to get prepared financially and for the home search overall.”

Mortgage rates will likely fall in 2025

The wild card in the housing market has been mortgage rates. They remained stubbornly high in 2024 despite the U.S. Federal Reserve cutting its own interest rates. (Mortgage rates are separate from the Fed’s rates, but typically move in the same direction.)

The Fed is expected to keep cutting its rates next year now that the rate of annual inflation has fallen closer in line to the Fed’s 2% target range. That should put pressure on mortgage rates to tick down.

Mortgage rates hit a high this year of an average 7.22% for 30-year, fixed-rate loans in the week ending May 2, according to Freddie Mac data. They fell to around 6.8% in November.

The National Association of Realtors (NAR) anticipates mortgage rates will stabilize around 6% in 2025.

NAR Chief Economist Lawrence Yun expects the U.S. Federal Reserve will cut its interest rates four times next year. That should result in mortgage rates “bouncing around” between 5.5% and 6.5% next year.

Rates in the 5% range could be a boon for both buyers and existing homeowners who hope to refinance their mortgages. Even small drops in rates can add up to big savings over time.

“If inflation continues to come down, then we should see [mortgage] interest rates continue to come down with it,” said New American Funding’s Obradovich. 

Home prices aren’t expected to shoot up

The good news for homebuyers is that elevated mortgage rates are expected to keep home prices in check. Buyers are simply hitting their financial limits.

“Prices are not likely to go down, but I don’t know if they can go up,” said Obradovich.

NAR predicted median home prices will rise 2% year-over-year in 2025.

Zillow’s forecast expects home values to increase 2.6%, while Realtor.com’s forecast pegged it a bit higher, at 3.7%.

More homes are expected to go up for sale

An expected bright spot for buyers will be more homes on the market to choose from.

“More inventory should shake loose in 2025, giving buyers a bit more room to breathe,” said Zillow’s Chief Economist Skylar Olsen in a statement.

The number of existing homes for sale is forecast to increase by 11.7% in 2025 compared to 2024, according to Realtor.com.

Realtor.com also expects to see the number of single-family housing starts, a measure of how many new houses are under construction, to grow by 13.8% year-over-year.

Home sales are forecast to rise

Real estate experts expect more homes to be sold in 2025 thanks to an increase in the number of properties for sale and lower mortgage rates. The combination should incentivize more buyers to head back to the market.

“It feels like it’s going to improve from here,” said Obradovich.

Zillow anticipates home sales will rise from a projected 4 million in 2024 to about 4.3 million in 2025.

Realtor.com expects home sales will rise modestly by 1.5%, to 4.07 million, in the new year.

NAR was more optimistic, predicting home sales will jump 9% next year.

“Maybe the worst is coming to an end,” NAR’s Yun said in a statement.

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Bargain Hunting for a Home? Here’s the Best Day to Buy

From Black Friday to Cyber Monday, the holiday shopping season is nigh upon us. And while there may be good deals on that blender or noise-cancelling headphones you’ve been eyeing, did you know that you might be able to get a great deal on a home right now too?

In fact, the best day to buy a home is coming up: December 4.

Historically, homebuyers who purchase a home on the fourth day of December get the best deal compared to those who buy on any other day, according to a report from real estate data provider ATTOM.

To determine the best time to buy, ATTOM compared home and condo sales completed on each calendar day over the last 11 years, a total of 52 million home sales.

The report found that those who bought on December 4 paid just a 4.8% premium over the estimated value of the home. That’s less than any other day.

“While mortgage rates are still high, taking advantage of seasonal price drops can help offset these costs,” ATTOM said in its report. “If you’ve been holding off on buying, now may be the chance you’ve been waiting for to secure your dream home.”

If you need a little more time to purchase a home, you still have a chance to make a great deal.

The other best days to buy are October 2 (5% above estimated value), December 24 (5.1% above estimated value), January 16 (5.1% above estimated value), November 13 (5.3% above estimated value), and October 9 (5.5% above estimated value).

All those dates saw buyers pay considerably less than the date where buyers paid the most above market value. That day was May 27, when buyers generally paid 14.6% more than the estimated value for their home.

Overall, the best months to buy are November, October, December, August, and September.

The median home price for those who bought in November was $241,500 compared to a median estimated value of $225,000, which is an average of 7.3% above market value.

Those who bought in October paid a 7.4% market premium, compared to 7.6% in December, 8% in August, and 8% in September.

And if you’re really looking for the biggest bargains of all, there are some states where buying during certain months can help you buy below market value.

According to the report, those who bought a home in Michigan in December paid 3.2% less than the market value. Homebuyers in Connecticut in January got a 1.2% discount, while Hawaii homebuyers secured a 1.1% discount in June.

Additionally, those who bought in December in Illinois or Minnesota paid 0.9% under the estimated value.

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The 20 Most Affordable Places in America to Buy a Home

Over the last few years, the housing market has stayed stubbornly expensive for much of the country—but there are certain areas where bargains can still be found.

In fact, there are still metropolitan areas where home prices are relatively affordable compared to more expensive areas, even in areas where prices have risen in recent years. Homebuyers who are willing and able to move may be able to save big.

Not surprisingly, most of the places with more reasonable home prices are in the Midwest, South, and East Coast. Many are Rust Belt cities that have struggled economically over the last few decades.

“The cost of living is also generally lower in these markets,” said Chris Porter, senior vice president, research at John Burns Research & Consulting. “And in many of these markets, it’s a generally older housing stock.”

Three Ohio metros were in the top five most affordable metros in October, according to an analysis of Zillow data. The analysis only included the 100 largest metros. 

Toledo, Ohio had the lowest median home list price at $207,567, according to the Zillow data. 

For example, buyers can snag a three-bedroom, two-bathroom 1,335-square-foot home in Toledo for less than $90,000. But they should keep in mind, the home was built in 1912.

All of the 20 most affordable metros had price tags that were at least $100,000 less than the national median list price of $399,600.

Porter pointed out that while these home prices are considered affordable to many buyers from other parts of the country, they may be steep for local buyers.

“The great majority of these markets have a median household income that is less than the national average,” said Porter.

In Toledo, the median household income was $45,405 in 2022 dollars, according to the U.S. Census Bureau. Nationally, it was $74,580 in the same year.

However, home prices in the 20 most affordable metros have not been immune to home price increases seen across the country over the last four years.

The median home list price in Toledo was up 18.7% from October 2020 to October 2024, according to Zillow data.

“These prices are up pretty significantly from where they were pre-pandemic,” said Porter.

For homebuyers looking for a bargain, here are the top 20 most affordable metro areas to buy a home in October:

1. Toledo, Ohio

Median home list price: $207,567

2. Akron, Ohio

Median home list price: $221,217

3. Rochester, N.Y.

Median home list price: $224,933

4. Pittsburgh, Pa.

Median home list price: $228,000

5. Dayton, Ohio

Median home list price: $231,600

6. Cleveland, Ohio

Median home list price: $236,233

7. St. Louis, Mo.

Median home list price: $241,350

8. Buffalo, N.Y.

Median home list price: $246,282

9. Detroit, Mich.

Median home list price: $248,333

10. McAllen, Texas

Median home list price: $249,633

11. Syracuse, N.Y.

Median home list price: $252,867

12. Wichita, Kan.

Median home list price: $259,667

13. Little Rock, Ark.

Median home list price: $265,400

14. Jackson, Miss.

Median home list price: $268,928

15. Harrisburg, Pa.

Median home list price: $276,667

16. Baton Rouge, La.

Median home list price: $283,333

17. Augusta, Ga.

Median home list price: $286,633

18. Louisville, Ky.

Median home list price: $290,150

19. Greensboro, N.C.

Median home list price: $292,017

20. El Paso, Texas

Median home list price: $292,283

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Staying Home to Save: How Moving Back with Parents Can Fast-Track a Down Payment

When Danielle Hale’s roommates both announced their engagements in 2012, she found herself facing a decision. Rather than searching for a new place and shouldering the rising costs of living solo, Hale, now Chief Economist at Realtor.com, opted to move back in with her parents to the Washington, D.C. suburbs.

“I knew they’d be open to it,” Hale said. “They’d offered before and…this time it felt like the right step.”

Over the next year, with no rent to pay, she saved up steadily. She was able to come up with a 10% down payment on a condo in Arlington, Va., within walking distance of public transportation.

By moving back home and not paying rent, young adults may be able to set aside more each month for a future home. Living with family also often means saving on utilities, groceries, and other monthly costs.

This can quickly add up toward a down payment at a time when home prices are high and there is a lot of competition in the market for more affordable starter homes.

“The more I saved, the more options opened up,” said Hale. “I wouldn’t trade that time for anything. Not only did it fast-track my path to homeownership, but it also gave me the chance to know my parents as adults.”

Moving in with family and friends can help homebuyers save

These days, down payments aren’t cheap. The typical first-time buyer put down 9% of the sale price of their home, according to a recent National Association of Realtors report.

To come up with this cash, 7% of all first-time buyers moved in with family or friends without paying rent, according to NAR. That may help to erase some of the stigma that some younger adults may face when moving back in with their families.

“The more people who do this and find success with it, the more acceptable it becomes,” said Hale.

How today's first-time buyers are making it work

More than two-thirds of first-time buyers, around 69%, still rely on savings as their primary source for a down payment, according to the NAR report. But with high home prices, buyers are also getting creative.

About 21% of first-time buyers used gifts or loans from family and friends, and others are tapping into financial assets: 12% accessed their retirement accounts, 8% sold stocks or bonds, and 1% even used cryptocurrency

Despite these strategies, buying a home isn’t easy.

Nearly a third, 32%, of first-time buyers said saving for a down payment was the hardest step, according to the NAR report. Many reported making sacrifices to reach their goal, often cutting back on luxuries, entertainment, and clothing—or even moving back in with Mom and Dad.

How adults can move back in with family

While moving back home offers big financial benefits, it also brings challenges around independence and privacy.

Hale recommends setting clear goals and boundaries with family to keep the arrangement positive.

“You know what adjustments to your schedule and routine you need to make to stay home long enough to make a difference in your savings and your goals,” Hale said.

Hale also jokes about her parents’ TV volume, suggesting that earplugs might be a good investment for anyone considering a similar move. Still, she treasures the experience.

“I’m very glad that I did,” Hale said. “I would actually highly recommend it to anyone in a similar circumstance.”

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Homeownership: A Reason to Be Thankful This Season

Thanksgiving is more than a holiday—it’s a moment to reflect on the people, experiences, and places that make life meaningful. For many, one of source of gratitude is their home.

A home is more than just shelter. Whether it’s the financial rewards it may bring, the stability it can provide, and the opportunity to personalize your space, homeownership represents so much more than four walls and a roof. It’s a place that you can make your own.

Guillaume Drew, the founder of the online bedding company Or & Zon, purchased his first home in 2016 in Brooklyn. He was 32.

“My house became home when I made a conscious effort to centralize my personal experiences and [decorate] it with different things I brought from places across the globe,” said Drew. “This created a story within that space, and it evolved into a space that became more personal to me and what I reside in.”

Homeownership: More than financial security

Homeownership has long been a cornerstone of financial stability as it has helped many people build wealth.

The typical homeowner’s net worth is nearly 38 times higher than that of a renter, according to the Federal Reserve’s Survey of Consumer Finances.

Homes often appreciate in value over time, which allows owners to build equity. U.S. homeowners who have mortgages, which make up about 62% of homes, gained $1.5 trillion in equity from the first quarter of 2023 through the first quarter of 2024, according to real estate data firm CoreLogic.

That represents a 9.6% year-over-year increase.

That increase in home value isn’t just numbers on a page. Home equity can provide owners with a financial cushion in hard times.

They may be able to tap into it if there is an expensive emergency or use it to help fund large expenses, such as funding a child’s education or completing home improvements.

Additionally, owning a home may help folks keep their housing costs in check.  

Unlike renters who may face unpredictable—and sometimes steep—rent increases, homeowners with fixed-rate mortgages can lock in much of their housing expenses. While property taxes and insurance costs rise, the bulk of their mortgage payment is set.

 

Building community through homeownership

A home is more than a financial investment. When people buy homes, they can put down roots in their communities, form relationships with neighbors, and invest in the area’s well-being.

This kind of stability may be especially appealing for families with children.

Kids who don’t move much during their childhoods are more likely to have higher test scores and fewer behavioral problems, according to a 2024 Habitat for Humanity report.

Making a house a home

Whether it’s painting the walls an outrageous color, planting a garden, or knocking down walls to create your dream kitchen, owning a home allows folks to create a space that reflects their personalities—without upsetting a landlord.

Research shows that personalizing your living space may enhance emotional well-being and reduce stress.

Individuals who actively engage in decorating and organizing their homes experience increased feelings of control and comfort, which may improve mental health outcomes, according to a study shared in Psychology Today.

That part of homeownership was important to Drew.

“Being a person who cares about sustainable luxury and culture, I decorated the interior with many handmade items purchased from different countries,” said Drew.

How to start your own homeownership journey

If you are dreaming of owning your own home, start by understanding your budget. Take a close look at your finances to determine how much home you can afford, start saving for a down payment, and be realistic about your monthly expenses.

A homebuying assessment is another powerful tool to help you prepare for homeownership. Conducted by a loan officer, this comprehensive evaluation takes a close look at your financial profile, including your credit score, savings, income, and existing debts.

The goal of an assessment is to create a personalized roadmap to help you achieve homeownership. This may include strategies for improving your credit, paying down debt, and exploring down payment assistance programs.

Following these steps can help make homeownership  a more achievable goal for those who may be renting now. Owning a home isn’t just about having a roof over your head: It’s about setting down roots and building a more secure future.

“To me, being a homeowner is what makes me appreciate life,” said Drew. “The security that comes with owning a house has driven me to new ideas, and enabled me to live, plan, and cherish precious moments with the people who matter.”