Redfin’s 2025 Predictions: Pent-Up Demand Will Lead to More Home Sales, But Many Would-Be Buyers Will Opt to Rent
Rental prices should stay flat while wages increase, improving affordability for renters, as the cost of buying a home rises
Prediction 1: Home Prices Will Rise
Redfin expects the median
Prediction 2: Mortgage Rates Will Remain Near
Mortgage rates are likely to remain in the high
However, mortgage rates could drop to the low
Prediction 3: There Will Be More Home Sales in 2025 Than 2024
Redfin expects existing home sales to tick up next year, ending 2025 at an annualized rate of between 4.1 million and 4.4 million. That represents a year-over-year increase of between
If sales post just a small increase, it will be because of high mortgage rates and low inventory, as homeowners continue to hang onto their homes.
Sales may post a bigger increase if mortgage rates decline more than expected, and/or if the recent burst in homebuying demand continues. Homebuying demand jumped in the weeks after the November election despite mortgage rates sitting around
Prediction 4: 2025 Will Be a Renter’s Market
Many Americans will remain renters or become renters. While the cost of buying a home will increase, rental affordability will improve. Redfin predicts the median
There will also be more new rentals coming on the market, with many of the units builders started working on during the pandemic apartment-building boom coming to fruition. This will create more supply than demand, motivating landlords to offer concessions like free parking, a free month of rent, more amenities or a hiatus on rent increases in order to retain residents.
Prediction 5: Fewer Construction Regulations Will Lead to More Homebuilding
Redfin predicts homebuilders will construct more single-family homes in 2025, though it will take a few years for the increase in homebuilding to make buying a house significantly more affordable. The Republican sweep of the White House, Senate and House has improved builder confidence by bringing renewed optimism that regulatory burdens may ease. Builders will also bank on the fact that the mortgage-rate lock-in effect will put a lid on the amount of existing inventory competing with new builds.
Easing regulations should also lead to a rebound in multifamily housing starts. That will be a reversal from 2024, when builders pulled back on apartment starts because of the glut of supply.
The caveat is that there are a few headwinds for builders. One, interest rates are likely to stay high. Two, the incoming administration has said it will cut back on immigration, which would likely lead to less residential construction, as immigrants make up about
Prediction 6: Wealthy People Will Pay Less to Buy and Sell Homes As Commissions Decline Slightly
In the first full year under the new National Association of Realtors (NAR) commission rules, Redfin expects real estate commissions to come down slightly. That’s true especially for luxury homes where agents have the most room to reduce their fees, and in competitive housing markets, where fees are increasingly a point of negotiation in a bidding war. It remains to be seen how much antitrust enforcers in the incoming administration will press additional real-estate industry reforms. The Department of Justice said in a recent filing that it “continues to scrutinize policies and practices in the residential real estate industry that may stifle competition,” but it’s unclear if it will take any formal action.
Prediction 7: The Real Estate Industry Will Consolidate
Under the new administration, the Federal Trade Commission will be more likely to approve mergers and acquisitions among large companies. Unlike other industries with a few dominant players, the
Prediction 8: Climate Risks Will Be Priced Into Individual Homes, Especially in Coastal Florida
The risk of natural disasters will start pushing down home prices or slowing price growth in climate-risky places, like coastal
Hurricane Helene and Hurricane Milton were a turning point for many middle- and lower-income
Prediction 9: Mayors in Blue Cities Will Help Reverse the Flight From Urban Centers
This will be especially true in
Prediction 10: Gen Z Will Rewrite the American Dream, Cutting Homeownership From the Script
Lower-priced homes will boom in 2025 compared to higher-priced homes, but that won’t be because young Americans or working-class people are breaking into homeownership. Instead, affordable homes will be snapped up by older buyers who are priced out of higher price tiers. Gen Zers, meanwhile, will keep living with family or renting until well into their 30s, opting to build wealth in other ways.
To view the full report, including charts, please visit: https://www.redfin.com/news/housing-market-predictions-2025
About Redfin
Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, and title insurance services. We run the country's #1 real estate brokerage site. Our customers can save thousands in fees while working with a top agent. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than
Redfin’s subsidiaries and affiliated brands include: Bay Equity Home Loans®, Rent.™, Apartment Guide®, Title Forward® and WalkScore®.
For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.
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Source: Redfin