I Asked Real Estate Pros What Buying a Home Will Be Like in 2025. Here’s What They Said

If you’re thinking about buying a home in 2025, you probably know about the double whammy of both home prices and mortgage interest rates increasing in the past few years. While there’s no crystal ball that can predict the specifics of the 2025 housing market, real estate experts do have some predictions for what’s in store for first-time buyers in the coming year. Will the persistently high interest rates subside? Will the market flip to be in buyers’ favor? And how will the recent presidential election play into all of this? 

It’s hard to say. But there are some silver linings: The housing market should be more balanced than in recent years, and housing inventory has been steadily rising, says Dottie Herman, vice chair and former CEO of Douglas Elliman Real Estate. 

“I don’t think the market will lean heavily in favor of either the buyer or the seller, but more demand will be there from potential buyers who’ve waited for prices to drop,” Herman says. 

In 2025, homebuyers should also expect fewer bidding wars, predicts Matt Vernon, head of consumer lending at Bank of America. Homes listed for sale received an average of 2.5 offers in October, a significant drop from the height of post-pandemic bidding wars, when homes often garnered closer to five offers, he says. This shift gives homebuyers more breathing room to carefully assess their options.

Here are five more realities homebuyers will face in 2025. 

First of all, some good news: There will be plenty of houses for buyers to choose from. Buyers can expect to see more houses hit the market in 2025, with an 11.7% increase in existing home inventory, according to a forecast from Realtor.com. 

Serious buyers should start looking right after the holidays, Herman recommends. 

Still, she won’t outright call it a buyers market — which is a market condition defined by “months supply” — an indicator that basically means how long it would take to sell all of the homes on the market. (A sellers market is when the month’s supply is under four months — a balanced market is when there’s four to six months of supply. Realtor.com suggests the market will be at 4.1 months supply in 2025.)

“Next year won’t tilt toward the buyer, but I predict there will be more room to negotiate with the seller,” she says. “I think the days of whoever shows up with the most cash and gets the winning bid are quickly phasing out.”

One thing to keep in mind: Conditions vary by market, so regions may be in a sellers market while others are tipping toward buyers. Watch for price cuts in list prices and higher-than-average “days on the market,” which are both indicators you’re in a buyers market, says Robert Washington, a broker with Savvy Buyers Realty in Florida. (Nationwide, the median “days on market” for for-sale homes is 41, according to Redfin’s data, so you might have some negotiating power if a home you’re interested in has been on the market for longer.)

The cost of homes has been climbing steadily for over a decade and will continue to go up in 2025, real estate experts predict. Realtor.com estimates home prices will grow by 3.7%.

New home prices aren’t coming down, either, says developer Cindy Stumpo, a real estate developer and founder of C. Stumpo Development. 

“The cost of materials, labor, and land is just too high. Developers are paying through the roof for construction loans and skilled workers, and that’s not changing until we solve the labor shortage in the trades,” she says.

Some areas where homes have typically been more affordable could be notably more expensive.

Many Americans are continuing a trend that began at the start of the pandemic, and moving from higher-priced areas in the West and the Northeast to relatively less expensive cities in the South and Midwest, says Matt Vernon, head of consumer lending at Bank of America, citing the company’s internal data. “This could lead to increased competition in the regions where these buyers are moving,” he says. 

Just like housing prices, first-time buyers are closely watching interest rates, which can majorly influence spending power. Over the last year, the average interest rate on a 30-year, fixed-rate mortgage (the most popular home loan) has swung between 6.08% and 7.22%, according to Freddie Mac.

Where interest rates will land in 2025 vary by analysis, and mortgage rates are notoriously tough to predict. 

Bank of America’s Global Research is predicting the Federal Reserve will lower rates gradually in 2025, according to Vernon, which could result in rates near the 4% range by the end of next year. 

Realtor.com, however, is forecasting that in 2025, the average mortgage rates in 2025 will be 6.3%, with rates edging down over the year to reach 6.2% by the end of 2025. The Mortgage Bankers Association’s forecast puts rates at 6.4% during the second half of 2025.

Regardless of where interest rates are next year, boosting your credit score before buying a home will help you qualify for the lowest interest rate, Vernon says. Those with credit scores of 760 or higher typically unlock the best rates. 

Proposed tariffs that would increase the cost of imported construction materials could also have major implications on the 2025 housing market, Stumpo says. Proposed mass deportations that Trump campaigned on could also have an impact on housing prices, according to Realtor.com.

On the fence about buying a home in 2025? If you’re planning to continue renting, there’s some relief. Rents are expected to remain flat in the new year, according to Realtor.com, with a slight 0.1% drop nationwide. The report looked at construction trends that show a growth in rental units in the South, West, Midwest, and Northeast, which can help with affordability.