2025 Real Estate Predictions Across the USA

Will the U.S. real estate outlook in 2025 differ from what occurred in 2024? Housing experts believe it could be more of the same in the year ahead.

Last year, the average and median U.S. sales price for homes sold topped $500,000 and $420,000, respectively. In 2024, the divergence between existing home and new home prices and sales widened due to what economists call the golden handcuffs effect.

When the Federal Reserve cut interest rates to zero percent at the onset of the coronavirus pandemic, homeowners refinanced their mortgages at obscenely low rates. Prospective homeowners bought in by taking advantage of lower home prices and ultra-low mortgage interest rates.

As a result, existing home prices are higher than those of newer residential properties, even though new homes are about 40 percent more expensive to build due to higher costs for building materials and labor.

Meanwhile, mortgage rates have exceeded the seven percent threshold amid rising U.S. Treasury yields. Since the yields on government bonds are linked to the mortgage market, borrowing costs continue to remain much higher than they were five or six years ago.

What does this mean for U.S. real estate in 2025? Let’s examine the experts’ predictions.

Real Estate Predictions 2025

Greg McBride, the chief financial analyst for Greg McBride, says that to accurately predict the 2025 real estate market in the USA, market watchers and prospective homebuyers might need to observe mortgage rates.

A better-than-expected economy, fiscal challenges, and the new administration’s trade agenda are all reasons to anticipate the Federal Reserve will leave interest rates higher. As a result, mortgage rates will continue to remain above six percent.

“The average 30-year fixed mortgage rate will spend most of the year in the 6s, with a short-lived spike above 7 percent, but never getting below 6 percent,” said Greg McBride, CFA, chief financial analyst for Bankrate, in a report. “Continued economic growth and worries about inflation and government debt will keep mortgage rates elevated.”

The U.S. central bank anticipates just two quarter-point rate cuts this year, down from the initial estimate of four quarter-point reductions.

Private sector optimism has risen in recent months on expectations that the Republican-led clean sweep of the White House, Senate, and House will result in a successful deregulation campaign.

The January National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) shows that homebuilder confidence is on an upward trajectory.

While land continues to be expensive and financing for private builders is still costly, “there is hope that policymakers are taking the impact of regulatory hurdles seriously and will make improvements in 2025,” says NAHB Chairman Carl Harris.

But what would be the 2025 real estate predictions for a place like Texas? Or, what would be the real estate forecast in 2025 for a vast housing market like New York?

The Texas housing market is anticipated to see higher prices and stimulated sales activity. New York, on the other hand, is projected to see its housing market grow at a sluggish pace.

Ultimately, U.S. home prices are projected to rise four percent this year, which will encourage would-be homebuyers to opt to rent. And renters already are being cost-burdened, with an estimated 21 million households spending more than 30 percent of their income on housing costs.

In the upcoming year, families will contend with a combination of high home prices, elevated mortgage rates, and rising property taxes and insurance costs.

In fact, a new study conducted by Intercontinental Exchange found that home insurance and property taxes represent a record 32 percent of the average monthly payment. The study authors noted that this is on top of the already record-high monthly mortgage payment of $2,070.

“Even accounting for rising incomes, it now requires ~30.7 percent of the median monthly U.S. household income to make the average mortgage payment, the highest relative share since June 2015,” they wrote.