Houses will keep getting more expensive in 2025, but not by much. The price of homes will go up by about 4%. More people will want to sell their homes too. This means buyers will have more houses to pick from.
Good news for people who want to buy a home – loans will cost less. Banks will charge around 5% for home loans. This makes it easier to buy a house.
Some cities like Perth and Adelaide will see home prices jump up a lot – as much as 14-18%. But in some places down south, house prices might fall.
Building companies plan to spend lots of money to make new houses. This means more homes for people to buy in the future.
National Price Growth Outlook
Home prices will keep going up, but more slowly than before. In 2024, prices will rise by 5.2%. In 2025, they'll rise by 3.8%.
Prices will grow faster than regular costs like food and gas for many years. This means buying a home can be a good way to save money.
Right now, two main things affect home prices. High loan rates and more homes for sale push prices down.
But many first-time buyers want homes, and there aren't enough houses. This helps push prices up.
Keep an eye on loan rates. When they change, more people might try to sell their homes. This could change how much homes cost where you live.
Regional Market Performance
Markets near the ocean will see home prices go up in 2025.
Perth will see big gains, with prices up 18.74%. Adelaide homes will also cost more, rising 14.64%.
In the Midwest, home prices depend on how many houses are for sale. When fewer homes are for sale, prices go up more.
Cities like Austin that used to be hot spots are now seeing prices drop by 4.8%.
But areas near the southern coasts are doing well, as there aren't as many homes for sale as before COVID.
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Coastal Markets Lead Growth
Living by the ocean is getting more popular. Cities near the water are seeing more homes for sale and higher prices. In the Northeast, more people are listing their homes – up by 15%. Home prices there went up by 3%.
Beach towns in the South are doing really well too. Eight out of ten of the best places to buy homes are in the South. Cities like Myrtle Beach and Savannah will see home prices go up by 8%.
Florida's beach homes keep bringing in buyers who want to invest.
In Ocean City, Maryland, many people now work from home. The city added better internet and work spaces to help these remote workers live by the beach.
Midwest Shows Mixed Results
The Midwest housing story is looking different in each city. Home prices went up just a bit – less than 1% from last year. But some cities saw big jumps. Houses in Milwaukee cost 11% more now. In Cleveland, they went up 9%.
More houses are for sale now – 22% more than last year. But we still have fewer homes to pick from than before COVID hit.
Looking at the numbers:
- Prices rose less than 1%
- More houses are for sale
- Each square foot costs 3.6% more
- Houses sell in about 17 days in Midwest City
Good news for buyers: more homes are coming up for sale. Prices will still go up, but more slowly. This is happening as real estate fees change and loan rates stay steady.
Sunbelt Trends Shifting South
The South is getting hotter – and we're not just talking about the weather! More people are moving to sunny places like Dallas, Miami, and Tampa. These warm cities are growing fast and becoming the new hot spots to live and work.
Dallas is now the number one place people want to move to. It beat out Nashville, which dropped to fifth place. Jobs are growing fast in Texas. Dallas added lots of new jobs. Austin added even more.
Half of all Americans now live in the South. By 2030, about 11 million more people will move there too. Houses and rent cost less in these sunny cities than in big cities up north.
People like that they can work, live, and have fun all in the same area. The rules for starting businesses are also easier in these warm places.
The sunny South is growing fast, and more people keep coming. They want to live where it's warm and costs less to have a good life.
Inventory Challenges and Solutions
Houses are hard to find right now. There aren't many homes for sale. In fact, there are fewer houses for sale now than before the pandemic began.
Builders are making new homes, but they can't build them fast enough. Many people want to buy houses.
People who own homes now don't want to sell. They've low monthly payments on their loans. If they moved, they'd have to pay more each month for a new house.
While we see more homes for sale than last year, we still need many more. We need five to six times more homes for a good market.
But it's hard for builders to help. They pay a lot for wood and bricks. They also can't find enough workers to build homes faster.
Mortgage Rate Trends
Mortgage rates are high right now. You'd pay about 6.81% if you got a 30-year home loan in November 2023.
Many experts think rates will go down in 2024, dropping to between 6.1% and 6.69%.
To know where rates are going, keep an eye on:
- Jobs and prices at the stores
- How much money people put in safe bonds
- What the government spends
Rates should keep going down into 2025. Big banks think they'll drop to about 5%.
But if the money stays strong and things cost more, rates mightn't drop as fast.
Housing Supply and Demand
Houses aren't the same everywhere in our country. Some busy cities have very few homes for sale – it would take less than 3 months to sell them all. Other places that grow more slowly have more homes – it takes 6 months to sell them.
We have more homes for sale this year than last year. But we still don't have enough houses. We need about 6 months of homes for sale to make buyers and sellers happy. Right now, we only have about 4 months.
Workers will build many new homes in the next few years. But we still need almost 4 million more houses than we'll have. This means house prices will likely go up because so many people want to buy homes.
Regional Supply Disparities
Housing is different in many parts of our country. Some places have lots of homes, while others don't have enough. This makes it hard for people to find homes they can afford.
Cities can build more homes than small towns. This is because cities have more space to build. Small towns often can't build as much because of rules that protect land.
Some areas make it hard to build homes:
- Places with strict rules about land use
- Places with lots of hills or old buildings
- The Northeast part of our country has fewer homes than the South and West
When an area can't build enough homes, prices go up. This makes it hard for families to buy or rent.
Towns are trying to fix this by making it easier to build new homes.
Inventory Growth Trends
The housing market has more homes for sale now. In October 2024, there were 1.37 million homes on the market. This is 34% more than last year. But we still have fewer homes than before COVID-19 hit.
More people are putting their homes up for sale. The Northeast has 15.6% more homes listed. The West has 13.4% more. The South has 8.3% more. The Midwest has 6.1% more.
Right now, it would take about 4 months to sell all the homes on the market. This means sellers have an edge. As mortgage rates go down, more people may sell their homes.
We still need many more homes. The country is short 3.7 million homes. This means we need to build a lot more houses to meet everyone's needs.
New Construction Impact
Building new homes is harder this year. Builders are making fewer homes – down 16% from last year. Getting permits to build is also down 7%.
Builders face big problems. Workers cost more money. Building supplies cost more too. Many builders feel worried about their work right now.
We need more homes in our country. We're short by more than 3.5 million homes. This makes houses very costly. A typical home now costs $419,300.
What makes building harder:
- Banks want more money to lend
- Not enough workers to build homes
- Land costs too much
- Rules and fees make building more costly
Things might get better next year. Banks may ask for less money to lend. But homes will still cost a lot because we need so many more of them.
Impact on First-Time Buyers
Buying your first home is harder than ever. Many people who want to buy their first home face three big problems. Homes cost too much. Bank loans have high rates. And there aren't enough homes to buy.
Right now, fewer people can buy their first home. Only 32 out of 100 home buyers are first-time buyers. In the past, it was 38 out of 100. Most buyers today are 35 years old.
Since 2020, home prices went up a lot. They rose much faster than what people earn at work. A $350,000 home now costs $680 more each month to pay for than before. This is because banks charge more for loans.
Many people who want to buy a home say they can't. They don't make enough money. They can't save enough for a down payment.
When home prices go up by just $1,000, over 106,000 people can no longer buy a home.
Market Shifts by Region
Coastal home prices tell an interesting story. Beach towns on the East Coast like Atlantic City and Kingston are doing well, with prices going up by 6%.
But homes near the water in Louisiana are getting cheaper, with prices dropping almost 8%.
Out West, it's a mix – cities in California like San Jose are seeing home prices rise. Florida's beach areas might see big drops in home prices.
The best news is in states up North. Places like Rhode Island and New Jersey will likely see home prices go up by 8-9% next year.
Coastal vs. Inland Trends
More people want to live by the ocean than inland these days. Beach towns are growing fast. Places like the Western Cape see home prices go up by 4.63% each year. Almost all rental homes there have people living in them.
Inland areas like Gauteng are growing slower. Home prices there only go up by 2.5% each year. Many rental homes sit empty – about 9 out of 100.
Small beach towns are very popular now. Many new people are moving to:
- Mossel Bay
- George
- Knysna
Living by the ocean costs more. Salt in the air and strong winds mean houses need more fixes.
But inland homes cost less to buy and take care of. Many people still want to move to the beach.
But if you're buying your first home, inland areas might be better for your wallet, since banks charge more money to loan you money now.
Price Growth Regional Leaders
The housing market shows clear winners in different parts of our country. Small towns in South Australia saw prices go up the most, rising 1% in November.
Towns in Tasmania came next, with prices up by 0.6%. Western Australia and Queensland's rural areas keep growing too, as homes there cost less and many people want to buy.
Looking at big cities, Perth's home prices grew the most – up 19% from last year.
Adelaide saw prices jump 15%, making homes there worth more than in Melbourne now. Brisbane stays strong with prices up 13%.
Small towns in Victoria saw a tiny drop in prices, down 0.05% in November.
Each area's success depends on how many homes are for sale and how many people want to buy there.
Economic Influences on Housing
The housing market is changing as we move toward 2025. Prices are rising more slowly now, at 2.4%. Banks are making it easier to get home loans. More people are buying homes as the economy gets stronger.
Things that affect home buying right now:
- Home loans cost less than before, down from 6.24%
- Not enough homes for sale means prices stay high
- More people need work now (4.2%), making it hard for new buyers
Getting a home is getting a bit easier. But we still need more houses built. As banks lower loan costs and builders make more homes, prices should rise less fast.
More people will be able to buy homes, but they'll still cost a lot.
Construction and Development Forecast
Building is growing bigger and bigger around the world. By 2025, people will spend $15.7 trillion on new buildings and roads.
In America, more building work is happening too. We'll see more growth each year until 2027.
Home building is getting better after a slow year in 2023. While big apartment buildings are slowing down a bit, other types of building are going up fast.
New stores, offices, and factories are being built more than before.
Banks will make it easier to borrow money in late 2024. This means more people can start their building projects sooner.
Buyer and Seller Dynamics
The housing market is changing in big ways. There are more homes for sale now – 23% more than last year. This means buyers have more choices and less competition.
Many sellers are lowering their prices. In July, more than 1 in 4 homes had price cuts. This helps buyers get better deals.
Looking ahead to 2025:
- More people will buy homes
- Home prices will go up slowly
- Sellers are more willing to work with buyers on price
The market is becoming more fair for everyone. Some buyers are waiting until next year when things might be clearer. Right now, changing loan rates make it hard for some people to buy.
Think of it like a see-saw that was tipped toward sellers before. Now it's moving to the middle, making things more even for buyers and sellers.
Investment Opportunities
Buying a house in 2025 can be a smart move. House prices will go up by about 4%. If you get a loan, you'll pay around 6% interest.
The best places to buy are in the Northeast. Atlantic City is really good – houses there will be worth more next year.
But stay away from places in Louisiana, where houses might lose value.
Don't buy in Provo or Salt Lake City right now. These places are risky and prices might drop.
Many people want to rent homes now. This makes buying a house to rent out a good idea.
You'll have more houses to pick from next year, with 12% more homes for sale.
If you plan to keep your house for many years, good news! By spring 2025, house prices should be higher than ever before.
This means your house could be worth more in the future, even if money is tight right now.
Affordability Factors
Buying a home next year may feel hard. Many people will face two big problems: high loan costs at 6.3% and home prices going up by 2.9%. Your wages mightn't grow as fast as home prices.
Here's what you need to know about buying a home in 2025:
- Not many homes are for sale, which keeps prices high.
- Loan costs may go up and down, but should drop a bit.
- Few people are selling their homes, and builders aren't making enough new ones.
People are still spending money, but you'll need to plan well to buy a home. The good news is some areas might see lower prices, which could help you find a good deal.
Remember:
- Save more money than you think you need.
- Look at many homes before you choose.
- Get ready for high costs.
- Be patient when searching.
Market Recovery Indicators
The housing market is getting better! Things are looking up for 2025. Big banks plan to lower interest rates next year. This will make it easier to buy homes and do business.
Let's look at what's changing:
- Banks will drop rates many times
- Home prices will stop falling in 2024
- More people will buy and sell homes later in 2024
Home prices hit their lowest point at the end of 2024. After that, they'll start to rise. We think homes will cost 2.8% more in 2025.
More people will want to buy houses when prices make sense again.
Even though homes are still hard to afford now, better days are coming. The market is healing and getting stronger each month.
Conclusion
The housing market is changing as we move into 2025. Home prices will go up a bit – about 3%. This is good news for people who want to buy or sell homes. Right now, there are fewer homes to pick from than before COVID. But things are getting better. More homes will be for sale soon, and loan rates won't jump around as much. If you want to buy or sell a home, watch for the right time and place. Think about where and when you want to move.
