Economists forecast these 5 housing market trends for 2025.

• The median sales price for a single-family home in the U.S. increased to $437,300 in October from $426,800 in September, as per the latest data from the U.S. Census.
• Experts predict that five key factors will impact the housing market in 2025.

Housing is not cheap — whether you're buying or renting.

The median sales price for a single-family home in the U.S. increased to $437,300 in October from $426,800 in September, as per the latest data from the U.S. Census.

In October, the median rent price in the U.S. was $1,619, which is roughly flat or up 0.2% from a year ago, but down 0.6% from a month prior, according to Redfin, an online real estate brokerage firm.

Redfin, an online real estate brokerage firm, has released a report by several economists predicting what is likely to happen in the housing market next year, despite the difficulty of accurately forecasting the future of the market.

A factor that can result in a mortgage application rejection is this. Bankruptcy may become more challenging for student loan borrowers under Trump. The enrollment of 18-year-old freshmen in college has decreased by 5%.

"According to Daryl Fairweather, chief economist at Redfin, if the housing market were to crash, it would have already happened by now due to its resilience in the face of rising interest rates."

According to Fairweather and other economists, here are five predictions for the housing market in 2025.

Home price growth will return to pre-pandemic levels

According to Redfin, the median asking price for a home in the U.S. is expected to increase by 4% in 2025, at a similar rate to the second half of this year.

Fairweather stated that the 4% annual pace is a "slowdown" compared to the rapid growth experienced in 2020.

In 2024, the rate of home price growth slowed down to pre-pandemic levels, meaning that while prices were still increasing, the pace of price growth was not as rapid as it had been in previous years.

Although growth is predicted to slow down, there may still be some fluctuations in prices.

According to Selma Hepp, an economist at CoreLogic, home price appreciation may remain flat or less than 1% during the 2025 spring home buying season.

LendingTree's senior economist, Jacob Channel, stated that the possibility of President-elect Donald Trump implementing some of his economic policies could lead to a significant increase in home prices.

He stated that there are some mixed signals regarding the potential future of home prices.

The implementation of general tariffs on foreign goods and materials, as well as mass deportations, could lead to an increase in construction costs and a decrease in home-building activity. As a result, the supply of homes in a constrained market may cause prices to rise significantly, according to Channel.

Flattening rents, with more room to negotiate

In 2025, the median asking rent price in the U.S. is expected to remain unchanged at a national level due to the availability of new rental properties, according to Redfin.

If rents remain stable and wages increase, individuals will have more money to spend and save, according to Redfin's Fairweather.

According to the 2023 U.S. Census data, over 21 million renter households are "cost-burdened," meaning they spent more than 30% of their income on housing costs.

Renters can negotiate better with landlords in a stable rental market, as some property managers are already offering concessions such as one month rent-free, a free parking space, or waiving fees, experts say.

Rent prices typically decline in the colder months of the year, as fewer people are apartment hunting during the late fall and winter seasons, Channel said.

If high home prices and mortgage rates continue to exclude potential buyers from the for-sale market next year, competition in the rental market may increase, according to him.

The typical rent price will vary depending on the local market, as explained by Hepp.

The "epicenter of multi-family construction" in Austin, Texas, she said, resulted in a significant decrease in rental costs. CoreLogic found that the metro area's rent prices fell by 2.9% from a year ago.

High rent growth of 5% annually is being experienced in metropolitan areas with supply constraints, such as Seattle, Washington, D.C., and New York City.

A 'bumpy' and 'volatile' year for mortgage rates

If the economy slows down, Redfin predicts that the average mortgage rate in 2025 will be around 6.8%, with rates hovering around the low-6% range.

Experts predict that 2025 will be a "bumpy" and "volatile" year for mortgage rates.

If tax cuts and tariffs are implemented, borrowing costs for home loans may increase, potentially leading to inflation.

LendingTree's Channel stated, "We're in uncharted territory, and it's difficult to predict the exact outcome."

Mortgage rates decreased this fall in anticipation of the first interest rate cut since March 2020. However, borrowing costs increased again in November following the bond market's reaction to Donald Trump's election win. Currently, mortgage rates have somewhat stabilized.

According to Jessica Lautz, the deputy chief economist and vice president of research at the National Association of Realtors, our expectation is that rates will be in the 6% range as we move into 2025.

More home sales than in 2024

Next year, home transactions may increase due to the release of pent-up demand from both buyers and sellers.

"People have waited long enough," Fairweather said.

According to Redfin, it is predicted that 4 million homes will be sold by the end of 2025, with an annual increase ranging from 2% to 9% compared to 2024.

Fairweather stated that the market is experiencing an influx of individuals who require new homes due to changes in their lives, such as those obtaining new jobs and those who have postponed their moving plans.

Next year, the number of buyers is predicted to increase, but the level of competition may not be as intense as it has been in the past, when bidding wars were common.

Hepp of CoreLogic stated that competition may be slowed down due to affordability factors such as rising insurance costs and property taxes.

"We'll definitely see more buyers out there," she said. "However, I don't see the competition intensifying to the level it has in the past few years."

Climate risks will bake into homes prices

Redfin predicts that the danger of severe weather and natural calamities may hinder home prices or impede their growth in regions such as coastal Florida, California, and parts of Texas, which are prone to hurricanes, wildfires, or other disasters.

Be cautious of potential complications if you're considering purchasing a home in a high-risk market with affordable price tags.

Some markets may have difficulty obtaining home insurance policies, which often come with high prices. Redfin's Fairweather stated that the financial impact of natural disasters can lead to increased home maintenance and repair costs.

The changing weather patterns pose a challenge to every part of the country, as evidenced by the recent atmospheric rivers in California that caused heavy flooding, which has affected homes not designed for such events.

Unlike areas like Asheville, North Carolina, which were hit by Hurricane Milton earlier this year, Florida is better prepared for hurricanes.

The insurance industry is likely to experience a significant increase in coverage due to the discrepancy between the design of homes and the climate they will face in the future, according to her statement.