How to get the housing market moving in 2025

In 2024, a lot of the words used to describe the housing market were similar to the ones you’d use for a broken-down car: stuck, stalled, jammed. 

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One reason for the sluggish market is high prices. The latest S&P CoreLogic Case-Shiller index, out Tuesday, showed home prices went up 3.6% nationally in October from a year earlier. That’s a slowdown in the pace of growth from September, but prices remain at an all-time high.

Another reason people hesitate to enter the market? Mortgage rates. A 30-year fixed-rate mortgage is slightly above where it was a year ago. So, what can we expect that stalled market to do in 2025?

The housing market is like a roller coaster right now, but not one of those crazy fun roller coasters. More like a ride for really little kids, where not a lot happens. 

“A little bit up, a little bit down, but overall … just kind of moving along at like a gentle speed,” said Oren Klachkin, an economist with Nationwide.

Xem thêm : Mortgage Rate Predictions for January 2025 – NerdWallet UK

He said mortgage rates are at the controls of this ride. If they come down into the 5% range next year, instead of the current 6, things could really get moving.

But, he pointed out, the Federal Reserve has signaled it’s going to cut interest rates at a cautious pace in 2025, which might keep mortgage rates from falling.

“We’re expecting interest rates to stay relatively high because the economy is going to stay relatively solid. We’re expecting a bit slower growth next year, but honestly, it’s not that much of a change from what we’ve seen this year,” he said.

One big question, said Joel Berner, a senior economist at Realtor.com, is what inflation does and how the policies of the new Donald Trump administration affect it. 

He said mass deportations of immigrants, for example, could affect a big chunk of the construction labor force, which would make new homes more expensive. 

“That would force builders to replace a lot of labor, probably at a higher cost and after a training learning curve. And so we see this as not only inflationary in the economy as a whole, but inflationary to the inputs of the housing market,” Berner said.

He’s also watching whether tariffs are put in place, “especially on things like lumber and construction inputs.” He said those costs will be passed along to homebuyers.

Xem thêm : Today’s Mortgage Rates by State – Dec. 17, 2024

Still, some people who’ve been riding this housing roller coaster for decades are hopeful, like Sheryl Merritt, a real estate broker in Raleigh, North Carolina. Even with high interest rates, she believes some people will move this year because they’ve decided it’s time. 

“People are turning 65 every day, and sometimes they’re still in the same house they had when they had their kids. They want to downsize, but they just haven’t,” she said.

Merritt said she’ll try to help those people get in the homes they want to be in.

The housing market has been a hard ride to be on in the past couple of years, Merritt added. She hopes it goes someplace else next year.