Home prices could rise 2% in 2025 and another 2% in 2026, according to the National Association of Realtors’ latest forecast.
The group’s economist Lawrence Yun said the median home price in the U.S. will continue to rise in 2025, but at a slower pace than in previous years, with the median existing home price reaching $410,700. I expected that. The median home price in November was $406,100.
“Housing price growth may slow further and become more gradual,” Yun said. “Maybe that’s a healthy thing. We want incomes to keep up with house prices. Maybe a few years or more of slower price growth is a good thing.”
Speaking at the group’s annual summit, Yun said he expects the U.S. Federal Reserve to maintain its gradual approach to monetary easing in 2025.
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“While concerns about the federal deficit and rising public debt may limit the extent of rate cuts, overall borrowing costs are expected to remain stable, making it a good option for potential buyers,” the forecast said. It will provide some sense of security.”
NAR expects mortgage rates to stabilize near 6% in 2025, making it the “new normal.”
At this pace, activity is expected to pick up as more buyers return to the market, with the association predicting 4.5 million existing home sales in 2025. As of November, the annual sales pace was 4.15 million units.
Despite the continuing housing shortage nationwide, Yun said inventory levels are gradually improving and are expected to increase further next year.
“This increase is expected to be due to a combination of new construction projects and homeowners’ decisions to list their properties, driven by stable mortgage rates and improving market conditions,” the group said. “NAR projects that this will lead to increased construction, with housing starts reaching 1.45 million units over the next few years, just below the historical average annual level of 1.5 million units.”
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This could allow more people to buy homes.
“Next year, homebuyers will be even more successful,” Yun said. “The worst affordability challenges have been overcome as increased inventory, stable mortgage rates, and continued growth in employment and income make homeownership possible for more Americans. ”
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