Realtor.com® 2025 Forecast Update: Affordability Crunch Stalls Market Momentum

Rhea-AI Summary

Realtor.com (NASDAQ:NWSA) has updated its 2025 housing market forecast, revealing a continued challenging environment for homebuyers. The report projects home sales to decline 1.5% to 4 million units in 2025, below 2024's 4.06 million units, marking the slowest pace since 1995.

Key forecasts include mortgage rates averaging 6.7% for 2025, with a year-end target of 6.4%, and home prices expected to rise by 2.5%, slower than 2024's growth. The market is showing signs of rebalancing with a 4.6 months' supply of homes, the highest since 2016, while inventory is projected to increase by 16.9% year-over-year.

Notable trends include a 47% surge in delistings over the 12 months ending in May, and continuing rental market softness with rents declining 2.1% over the last year.

Positive

• Housing market balance shifting toward buyer-friendly conditions with 4.6 months' supply
• Housing inventory expected to increase 16.9% year-over-year
• Mortgage rates projected to ease to 6.4% by year-end from current 6.7%
• Rental costs continuing to decline, offering 2.7% savings from peak

Negative

• Home sales forecast to decline 1.5% to 4 million units, lowest since 1995
• Persistent affordability challenges continue to limit buyer activity
• 47% increase in property delistings indicating seller resistance to market conditions
• Home prices still growing at 2.5% despite affordability issues

Insights

Real Estate Economist

Realtor.com's revised 2025 forecast shows deteriorating housing market conditions with sales declining and price growth slowing amid persistent affordability challenges.

The updated forecast from Realtor.com indicates a significant shift in housing market dynamics for 2025, with conditions proving more challenging than initially projected. While the market is indeed moving toward more balance as originally forecasted, the path is more complicated than anticipated. Home sales are now expected to decline by 1.5% to approximately 4 million units, below 2024's already historically low 4.06 million - the slowest pace since 1995.

The revised forecast shows home price appreciation slowing to 2.5% for 2025, considerably lower than both the initial projection of 3.7% and 2024's 4.5% growth. This deceleration reflects weakening demand despite improving inventory, which is expected to increase by 16.9% year-over-year.

A particularly telling market signal is the dramatic 47% increase in delistings over the 12 months ending in May, as sellers withdraw properties rather than accept market realities. This resistance could ultimately constrain supply and slow the transition to a buyer's market.

Mortgage rates, originally projected to average 6.3% with a year-end rate of 6.2%, have been revised upward to an average of 6.7% with a year-end projection of 6.4%. This adjustment follows post-election interest rate increases driven by anticipated economic growth, inflation concerns, and deficit expectations related to the Big Beautiful Bill Act.

The months' supply of homes has reached 4.6 months nationwide, the highest since 2016, theoretically creating more buyer-friendly conditions. However, this varies significantly by region, with the South and West showing more inventory growth while the Northeast and Midwest remain tighter markets. More than one in five listings saw price reductions in June as sellers adjust to changing conditions.

For potential buyers still sitting on the sidelines, renting continues to present an attractive alternative, with median asking rents dropping 2.1% over the last year and marking 23 consecutive months of declines. This translates to monthly savings of nearly $50 compared to the August 2022 peak.

With home sales expected to dip below 2024 levels, rising delistings and regional shifts complicate what was once expected to be a turning point for buyers

AUSTIN, Texas, July 23, 2025 /PRNewswire/ -- Home sales are expected to remain subdued in 2025, as persistent affordability challenges and mortgage rates that have stayed higher than anticipated continue to put pressure on the market, according to the Realtor.com^® 2025 Forecast Update. Home price growth is also projected to slow, reflecting a more balanced housing landscape.

"Even with more homes on the market, buyer response has remained muted compared to what we'd expect from similar supply shifts in the past," said Danielle Hale, chief economist at Realtor.com^®. "In regions like the South and West, inventory gains have been more substantial, but affordability constraints continue to weigh on demand. Meanwhile, the Northeast and Midwest remain tighter markets with relatively steadier buyer activity. "

Housing Market Shifts Toward a More Balanced Market
One of the key callouts in Realtor.com^®.'s original 2025 forecast was that housing market balance, as measured by the months' supply of homes for sale, would shift from seller-friendly into more balanced market territory, setting the scene for the most buyer-friendly market since 2016. This trend toward a more balanced housing market remains intact as anticipated, with months' supply already hitting a post-2016 milestone nationwide of 4.6 months.

The buyer-friendly move is creating opportunities for those who have been waiting, but depending on the geographic market, like the Northeast and Midwest, and price point, like homes priced around the national median, buyers may hold more or less bargaining power.

Mortgage Rates to Remain High Amid Ongoing Uncertainty, But Even Small Dips Offer Relief
Mortgage rates are expected to ease slowly for the remainder of 2025, according to the 2025 updated Realtor.com^® forecast with an average rate of 6.7% for the year, reaching 6.4% by the end of the year.

This is a slight upward revision as after the 2024 election, mortgage rates shot up as investors anticipated a mix of greater economic growth, higher inflation and larger deficits. While the economy remains steady, growth is expected to slow, which has helped soften the trend in mortgage rates. Nonetheless, the still-looming potential for tariff-induced inflation and a growing fiscal debt in the U.S. that is projected to expand in the wake of the Big Beautiful Bill Act, have set a fairly high floor under interest rates for now.

Home Sales Steady
Home sales in 2025 are expected to total around 4 million, slightly below 2024's historically low figure of 4.06 million — the slowest pace since 1995. Our original forecast called for only a modest improvement, and sales year to date have slightly outperformed expectations, surpassing our projections by roughly 2%.

Despite the modest upside seen year to date, sales have faltered in recent months, once again lagging just behind the prior year's pace, and we anticipate this to continue, on average, rather than a stronger second half pickup. As a result, we now expect that total existing-home sales for 2025 will end the year about 1.5% lower than in 2024.

Home Prices Continue to Climb, But Growth is Expected to Slow Down
The lack of affordability continues to hover at or near long-term highs, and home prices have remained stubbornly high in the face of a housing supply shortage that has plagued the U.S. for over a decade. Our initial expectation was to see only modest slowing in home price growth in 2025; however, as 2025 has unfolded, home sales price growth has slowed even as listing price trends are mixed, with several metro areas showing listing price declines, particularly in the South and West where inventory is more fully recovered.

As buyers are likely to have more for-sale options to choose from, we anticipate home sales prices to advance by an average of 2.5% across the calendar year nationwide in 2025, a step down from 2024 and our prior expectations.

Sellers React to Changing Market Dynamics
The recent Realtor.com^® June Housing Trends Report found that sellers have noted the trend towards a more balanced market and are reacting. In the month, more than one in five listings had a price reduction as inventory climbed nearly 30% and time on market slowed, helping to anchor the expectation that the median home sales price is likely to follow.

At the same time, not all sellers have chosen to match the market. A rising number of homeowners opted instead to take their listing off of the market without a sale in a move called a 'delisting'. These delistings soared 47% in the 12-months ending in May pushing up their prevalence among listed homes and providing evidence that some sellers would prefer to wait rather than meet the market where it is. Delistings dampen supply and reduce the number of homes for-sale if they outpace new listings, so they can ultimately impact the balance of supply and demand.

"If the recent rise in delistings continues or picks up pace, it could interrupt the more buyer-friendly momentum we've started to see," said Danielle Hale, chief economist, Realtor.com^®. "Buyers should keep that in mind when making offers — while homes that have been on the market longer often signal sellers who are open to negotiation, that's not always the case."

Renting continues to provide an attractive option
With conditions evolving very gradually, our rental market outlook has not changed. Buying a home is challenging and rents continue to ebb, dropping 2.1% over the last year. In June, rents notched a 23rd straight month of easing that brought the median asking rent down 2.7% from its August 2022 high. This translates into a monthly savings of nearly $50 for renters who are willing to continue to wait for their shot at the American dream.

Realtor.com^® 2025 Forecast for Key Housing Indicators

	2025 Realtor.com®  Forecast REVISED	2025 Realtor.com®  Forecast (Dec 2024)	2024 Historical Data	2013-2019 Historical Average
Mortgage Rates	6.7% (avg) 6.4% (year- end)	6.3% (avg) 6.2% (year- end)	6.7% (avg) 6.7% (year- end)	4.0% (avg)
Existing Home Median Price Appreciation (Y/Y)	+2.5 %	+3.7 %	+4.5 %	+6.5 %
Existing Home Sales (Y/Y | Annual Total)	-1.5% 4.00 million	+1.5%* 4.07 million	-0.6% 4.06 million	+2.1% 5.28 million
Existing Home For-Sale Inventory (Y/Y)	+16.9 %	+11.7 %	+15.2 %	-3.6 %
Single-Family Home Housing Starts (Y/Y | Annual)	-3.7% 0.98 million	+13.8% 1.1 million	+6.9% 1.0 million	0.8 million
Homeownership Rate	65.2 %	65.3 %	65.6 %	64.2 %
Rent Growth	-0.1 %	-0.1 %	-0.2 %	+5.2 %

*Growth rate as published calculated from then-projected 2024 total existing home sales of 4.02M.

About Realtor.com^®
Realtor.com^® pioneered online real estate and has been at the forefront for over 25 years, connecting buyers, sellers, and renters with trusted insights, professional guidance and powerful tools to help them find their perfect home. Recognized as the No. 1 site trusted by real estate professionals, Realtor.com^® is a valued partner, delivering consumer connections and a robust suite of marketing tools to support business growth. Realtor.com^® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc.

Media contact: Mallory Micetich, press@realtor.com

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SOURCE Realtor.com

FAQ

What is Realtor.com's home sales forecast for 2025?

Realtor.com forecasts home sales to decline 1.5% to 4 million units in 2025, below 2024's 4.06 million units, marking the slowest pace since 1995.

What are the projected mortgage rates for 2025 according to Realtor.com?

Mortgage rates are expected to average 6.7% in 2025, with rates easing to 6.4% by year-end, slightly higher than previously forecast.

How much are home prices expected to increase in 2025?

Home prices are projected to increase by 2.5% nationwide in 2025, showing slower growth compared to 2024's 4.5% increase.

What is happening with housing inventory in 2025?

Housing inventory is forecast to increase by 16.9% year-over-year in 2025, with months' supply reaching 4.6 months, the highest level since 2016.

How is the rental market performing in 2025?

Rents have declined 2.1% over the last year, with 23 straight months of easing, resulting in approximately $50 monthly savings for renters compared to peak levels.

What is the trend in property delistings for 2025?

Property delistings have increased by 47% in the 12 months ending in May, indicating sellers are choosing to withdraw properties rather than adjust to market conditions.