Realtor.com® 2025 Forecast Update: Affordability Crunch Stalls Market Momentum

Realtor.com® 2025 Forecast Update: Affordability Crunch Stalls Market Momentum

With home sales expected to dip below 2024 levels, rising delistings and regional shifts complicate what was once expected to be a turning point for buyers

AUSTIN, Texas, July 23, 2025 /PRNewswire/ -- Home sales are expected to remain subdued in 2025, as persistent affordability challenges and mortgage rates that have stayed higher than anticipated continue to put pressure on the market, according to the Realtor.com^® 2025 Forecast Update. Home price growth is also projected to slow, reflecting a more balanced housing landscape.

"Even with more homes on the market, buyer response has remained muted compared to what we'd expect from similar supply shifts in the past," said Danielle Hale, chief economist at Realtor.com^®. "In regions like the South and West, inventory gains have been more substantial, but affordability constraints continue to weigh on demand. Meanwhile, the Northeast and Midwest remain tighter markets with relatively steadier buyer activity. "

Housing Market Shifts Toward a More Balanced Market
One of the key callouts in Realtor.com^®.'s original 2025 forecast was that housing market balance, as measured by the months' supply of homes for sale, would shift from seller-friendly into more balanced market territory, setting the scene for the most buyer-friendly market since 2016. This trend toward a more balanced housing market remains intact as anticipated, with months' supply already hitting a post-2016 milestone nationwide of 4.6 months.

The buyer-friendly move is creating opportunities for those who have been waiting, but depending on the geographic market, like the Northeast and Midwest, and price point, like homes priced around the national median, buyers may hold more or less bargaining power.

Mortgage Rates to Remain High Amid Ongoing Uncertainty, But Even Small Dips Offer Relief
Mortgage rates are expected to ease slowly for the remainder of 2025, according to the 2025 updated Realtor.com^® forecast with an average rate of 6.7% for the year, reaching 6.4% by the end of the year.

This is a slight upward revision as after the 2024 election, mortgage rates shot up as investors anticipated a mix of greater economic growth, higher inflation and larger deficits. While the economy remains steady, growth is expected to slow, which has helped soften the trend in mortgage rates. Nonetheless, the still-looming potential for tariff-induced inflation and a growing fiscal debt in the U.S. that is projected to expand in the wake of the Big Beautiful Bill Act, have set a fairly high floor under interest rates for now.

Home Sales Steady
Home sales in 2025 are expected to total around 4 million, slightly below 2024's historically low figure of 4.06 million — the slowest pace since 1995. Our original forecast called for only a modest improvement, and sales year to date have slightly outperformed expectations, surpassing our projections by roughly 2%.

Despite the modest upside seen year to date, sales have faltered in recent months, once again lagging just behind the prior year's pace, and we anticipate this to continue, on average, rather than a stronger second half pickup. As a result, we now expect that total existing-home sales for 2025 will end the year about 1.5% lower than in 2024.

Home Prices Continue to Climb, But Growth is Expected to Slow Down
The lack of affordability continues to hover at or near long-term highs, and home prices have remained stubbornly high in the face of a housing supply shortage that has plagued the U.S. for over a decade. Our initial expectation was to see only modest slowing in home price growth in 2025; however, as 2025 has unfolded, home sales price growth has slowed even as listing price trends are mixed, with several metro areas showing listing price declines, particularly in the South and West where inventory is more fully recovered.

As buyers are likely to have more for-sale options to choose from, we anticipate home sales prices to advance by an average of 2.5% across the calendar year nationwide in 2025, a step down from 2024 and our prior expectations.

Sellers React to Changing Market Dynamics
The recent Realtor.com^®June Housing Trends Report found that sellers have noted the trend towards a more balanced market and are reacting. In the month, more than one in five listings had a price reduction as inventory climbed nearly 30% and time on market slowed, helping to anchor the expectation that the median home sales price is likely to follow.

At the same time, not all sellers have chosen to match the market. A rising number of homeowners opted instead to take their listing off of the market without a sale in a move called a 'delisting'. These delistings soared 47% in the 12-months ending in May pushing up their prevalence among listed homes and providing evidence that some sellers would prefer to wait rather than meet the market where it is. Delistings dampen supply and reduce the number of homes for-sale if they outpace new listings, so they can ultimately impact the balance of supply and demand.

"If the recent rise in delistings continues or picks up pace, it could interrupt the more buyer-friendly momentum we've started to see," said Danielle Hale, chief economist, Realtor.com^®. "Buyers should keep that in mind when making offers — while homes that have been on the market longer often signal sellers who are open to negotiation, that's not always the case."

Renting continues to provide an attractive option
With conditions evolving very gradually, our rental market outlook has not changed. Buying a home is challenging and rents continue to ebb, dropping 2.1% over the last year. In June, rents notched a 23rd straight month of easing that brought the median asking rent down 2.7% from its August 2022 high. This translates into a monthly savings of nearly $50 for renters who are willing to continue to wait for their shot at the American dream.

Realtor.com^® 2025 Forecast for Key Housing Indicators

*Growth rate as published calculated from then-projected 2024 total existing home sales of 4.02M.

About Realtor.com^®
Realtor.com^® pioneered online real estate and has been at the forefront for over 25 years, connecting buyers, sellers, and renters with trusted insights, professional guidance and powerful tools to help them find their perfect home. Recognized as the No. 1 site trusted by real estate professionals, Realtor.com^® is a valued partner, delivering consumer connections and a robust suite of marketing tools to support business growth. Realtor.com^® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc.

Media contact: Mallory Micetich, press@realtor.com

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SOURCE Realtor.com