The 2025 housing market brings a mix of hurdles and hope. Mortgage rates are projected to remain above 6%, keeping many homeowners “locked in” to their low-rate mortgages and limiting inventory. While the market won’t be bursting with options, modest improvements in supply—especially during the spring and summer—offer a silver lining. Home prices are expected to climb at a steady 3.7% annually, fueled by limited new construction and strong demand from older, wealthier buyers. The road ahead isn’t smooth, but pro-business policies under President-elect Trump and incremental inventory growth hint at a market moving toward balance.
Shifting demographics and evolving trends are shaping the real estate landscape. First-time buyers are older than ever, with a median age of 38, and multigenerational households now make up 17% of sales as families pool resources. Meanwhile, the popularity of urban living is rising, and all-cash buyers have hit record highs. Renters are also changing the game—older, pet-loving, and more settled into the renter lifestyle, they’re demanding pet-friendly spaces as a must-have in competitive rental markets. For sellers, this means adapting to a new kind of buyer: practical, trend-conscious, and ready to negotiate.
Zillow predicts a more active housing market in 2025, albeit with some unpredictability. Buyers can expect a slight rise in home sales to 4.3 million and more leverage as inventory loosens, particularly in the Southwest, where buyers markets are gaining momentum. Smaller homes and condos are trending, as buyers embrace cozy, sustainable living spaces over sprawling open-floor plans. On the rental side, concessions like free parking or rent discounts may dwindle as multifamily construction cools in late 2025. While affordability challenges persist, buyers and renters alike can look forward to a more approachable market—so long as they’re ready for a ride with a few twists and turns.
