2025 Real Estate Market Predictions

Heading into 2025, industry experts share their thoughts and opinions on trends to expect in the new year

By Michelle Huffman

After experiencing a surge in home prices like we’ve never seen before—and may never see again—real estate experts are predicting that 2025 will usher in a more stable real estate market.

According to the Case-Shiller National Home Price Index, home prices increased by 47% from 2020 to 2024. That’s more growth in four years than in the entire decade prior.

However, things began to slow down in 2024, and several real estate experts from the Residential Real Estate Council and the National Association of REALTORS^® say we may be looking at a new normal in terms of home prices, interest rates and inventory levels.

Here are their top four predictions for the real estate market in 2025.

1. The market will stabilize, posing challenges and opportunities for both buyers and sellers.

While all real estate is local, and certain pockets will remain hot (see sidebar), overall, the experts predict balance and stability across the nation.

“It looks like we will continue to see slowly increasing inventory—which we need—but it does not appear that this will move completely to either a seller or a buyer market,” says Dale Carlton, CRS, broker-owner at Carlton Realty, Inc. in Fayetteville, Arkansas, and a CRS Instructor.

His comments are echoed by fellow CRS Instructor Mike Selvaggio, CRS, broker-owner at Delaware Homes, Inc. in Townsend, Delaware: “There may be a shift toward the buyer’s market with an increase in supply that’s been generated by builders and developers, but probably not enough to make a dramatic difference.”

Stacy Hamilton, CRS, associate broker and executive director of Little Rock Realtors Association in Little Rock, Arkansas, warns that newer agents may experience this upcoming year as a down market compared to the past few years, but she sees it as steady.

“Houses will continue to enter the market and sell, but list periods could extend to six months or so. Buyers will have more options when shopping for houses but not an abundance of options,” she says. “This is a market where buyers can take time to seriously consider a home without the pressure of acting on a whim. Sellers will need more counseling and guidance as their homes remain in the market for longer listing periods.”

2. Interest rates may ease, but buyers should get used to them where they are.

The Federal Reserve Board has hinted it will begin lowering the federal fund rate by the end of the year, which would trigger mortgage interest rates to recede.

Jessica Lautz, deputy chief economist and vice president of research at the National Association of REALTORS^®, says this could have three potential effects: bringing new buyers to the market, causing builders to ramp up housing starts and loosening the “lock-in effect” where homeowners don’t want to sell because their lock-in rate is so good.

“Consumers will jump into the market if rates are as low as 5.5%,” says Lee Barrett, CRS, broker/owner at Barrett and Co., Inc. in Las Vegas, Nevada, and a CRS Instructor.

But it’s unlikely we will see rates that low, the experts say, so it may yet take years for these locked-in homeowners to turn over their keys. Instead, it’s important to normalize rates at 6% and 7%.

“The reality is that we must continue to encourage buyers to ‘marry the house and date the rate,’” Selvaggio says.

In 2025, CRSs need to “retrain buyers on what a more normal interest rate looks like,” Hamilton says. “The incredibly low rates of 2%–4% were not the norm but a small period in our history. We will not see rates that low again for a long time.”

3. Inventory may improve, but it may not help affordability.

Inventory has been pervasively sluggish over the past few years, but the experts hope housing inventory will improve in 2025. Besides the dropping interest rates that might bring more sellers out, there are other factors at play that may help inventory, including greater economic stability, policy interventions and homebuilders ramping up production to meet demand, Selvaggio says.

Carlton especially hopes that with the added inflation costs of 2021–2023 behind us, builders will be able to bring more affordable housing to market. While he has seen inventory grow in higher price ranges, the shortage of properties in lower, more affordable price points persists.

“Each geographical area of the U.S. has different price points, but all seem to be experiencing similar scenarios,” he says.

Selvaggio agrees: “This is a very real and important piece of our business, and I only hope it can be addressed in the near future.”

4. Artificial intelligence will start to shape real estate analysis.

Analytics driven by artificial intelligence (AI) are on the market and moving into the hands of agents who are willing to learn how to use them.

“The better AI gets at predicting behavior, the more we are going to see agents able to use AI to identify potential sellers accurately, provide price estimates at a more accurate level, and understand what upgrade and improvement trends will better impact the value of a home,” Carlton says. “We have always had access to great data; now we have access to analyze great data in a phenomenal way.”

Of course, AI is no silver bullet, Barrett says. For example, Selvaggio’s experiments with AI yielded a listing description that boasted the ability to “entertain in the beautifully remodeled owner’s bath and hall bath.”

For her part, Hamilton hopes to see MLS improve its features to match what’s coming out on the market.

All advise that agents stay up to date with these new technologies, including virtual reality and augmented reality for tours, drone photography, and tools for design, communication and planning.

Register for our upcoming webinars to ensure you’re preparing your business for 2025 at www.CRS.com/education/education-catalog.

Photo: iStock.com baona