The U.S. housing market has been in a holding pattern for years. Homebuyers and homeowners alike have been waiting for the perfect moment to buy or sell. But could 2025 finally be the year when they get lucky?
Experts are optimistic that the housing market may regain some balance next year, with the right conditions for both buying and selling. However, success will depend on where you are and when you make your move.
A “Frozen” Year: What 2024 Taught Us
The housing market in 2024 has been somewhat “frozen,” according to Moody’s Analytics economist Matthew Walsh. Due to high mortgage rates and stubbornly low inventory, aspiring homebuyers have largely been sidelined, unable to afford the high prices.
“Demand remained mostly low, and its weakness is evident in the existing home sales data, which is trending near recessionary lows,” says Walsh.
This imbalance between supply and demand has created a stagnant market. Existing home sales have been on a downward trajectory, resembling levels seen during the Great Financial Crisis. Meanwhile, house prices have been propped up by the scarcity of available homes.
Moody’s Analytics reports that home appreciation in the U.S. saw a modest increase of 4% to 4.5% in 2024, driven by both low inventory and low demand. But as we approach 2025, Walsh expects the market to see more inventory and slower price growth as new construction ramps up.
When Is the Right Moment to Buy or Sell?
For homebuyers and homeowners ready to make a move in 2025, timing will be key. According to Kara Ng, a senior economist at Zillow, mortgage rates will play a crucial role.
“When mortgage rates drop, even temporarily, buyers are ready to jump back in,” says Ng.
In fact, when mortgage rates fell to a two-year low in September, many buyers rushed to the market. If these rates dip again in 2025, a rush of activity could follow, especially in early months before rates climb again.
Key Advice for Buyers and Sellers:
- Best Time to Sell: Sellers who get their homes on the market before spring will likely face the most competition but also encounter a larger pool of buyers. Some regions, especially in the Sun Belt (e.g., Florida and Texas), are currently seeing weaker demand.
- Best Time to Buy: For buyers, the best deal may be found in the off-season. Although home selection may be smaller, there is typically less competition, meaning you can negotiate a better price.
Experts like Chen Zhao of Redfin recommend keeping an eye on mortgage rates and understanding that the market will likely be more competitive in the spring. Buyers who act early in the year might secure a better deal before rates increase.
Where Should You Buy?
As we look to 2025, many experts suggest that the Sun Belt will be the key area to watch. Places like Florida and Texas are seeing increased construction, leading to more affordable options compared to coastal cities.
“In the Sun Belt, there are more opportunities for buyers to negotiate better deals,” says Kara Ng.
However, some markets in Florida are showing signs of overvaluation, meaning that price appreciation may slow or even decline in certain areas.
Moody’s Analytics also highlights the risk of buying in markets like Arizona, Idaho, and certain parts of Texas, where rapid home price growth during the pandemic has led to an overvaluation. Boise, Idaho, in particular, is one city that may experience price declines as the market corrects.
Where Should You Sell?
On the flip side, experts are optimistic about the Northeast and California markets. Both regions have experienced a slow increase in inventory, but Moody’s Analytics forecasts strong price appreciation, particularly in areas with limited new construction.
“California and the Northeast are likely to see home prices grow faster than the national average in 2025,” says Walsh.
States like Pennsylvania and New York have had limited new construction, which could support higher home prices as demand remains relatively stable. Sellers in these markets may have an edge, as inventory remains low.
What To Expect in 2025: More Sales, But Higher Prices
Looking ahead, Redfin predicts that home sales in 2025 will rise slightly due to pent-up demand. However, many buyers will remain priced out due to the high prices and mortgage rates. Sales are expected to increase by 2% to 9% compared to 2024, with existing home sales gradually picking up throughout the year.
Despite these increased sales, prices are expected to remain high, particularly in the more competitive markets. The key will be to time your move right—buying or selling when the market conditions align with your goals.
Key Takeaways for Homebuyers and Homeowners in 2025:
- Timing Matters: The best time to buy or sell in 2025 will depend heavily on mortgage rates and local market conditions. Stay informed about changes in supply and demand and watch for any fluctuations in mortgage rates.
- Buy in the Off-Season: Buyers who enter the market in the off-season may be able to secure a better deal by avoiding competition and negotiating harder.
- Sell Early in the Year: Sellers who list their homes before the spring season will face more buyers but also more competition.
- Focus on the Sun Belt: For buyers, Florida and Texas could offer more affordable options compared to coastal cities.
- Look to the Northeast and California: Sellers in these areas may benefit from stronger price appreciation due to low inventory and high demand.
