Realtor.com’s 2025 Housing Forecast indicates a positive outlook for both home prices and sales, with the potential for the first balanced housing market since 2016. The report anticipates an increase in housing inventory, offering relief to buyers and sellers.
Economic indicators show that unemployment has risen slightly, while hourly wages increased by 4.0%, surpassing recent inflation rates. Despite a decrease in job openings compared to last year, they remain plentiful. This economic adjustment may allow the Federal Reserve to continue its monetary policy normalization, with expectations of a quarter-point rate cut later this month if inflation remains moderate.
Mortgage rates have decreased for the second consecutive week to 6.7%, reflecting adjustments in market expectations due to the economic outlook and the implications of the 2024 elections.
Housing data reveals divergent trends in pending and new home sales, both based on contract signings. Pending home sales rose in October compared to last year, whereas new home sales declined as lower mortgage rates prompted more existing homes to enter the market.
Realtor.com reports that homes spent more time on the market in November due to an early-month increase in mortgage rates. This led to a smaller annual gain in new sellers, potentially reversing October’s pending home sales trend.
Rental data shows rents continued their decline in October but are only about 2% below their peak from 2022. The existing rental supply is expected to keep rents stable into 2025, particularly in Southern regions. In New York City, overall rent increases persist except for Manhattan, where rents dropped enough for residents to afford homes priced between $600,000 and $750,000 elsewhere popular among Manhattan-based buyers.
