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HOME PRICES: A MODERATE INCREASE

After a few years of soaring prices, 2025 should bring more stability. However, prices will likely still climb modestly in most regions. Future buyers should plan for increased costs but may also find less competition than in the frenzied markets of recent years.

MORTGAGE RATES: A WILD CARD

Mortgage rates are predicted to hover around 6-7%. While not as low as the record-breaking rates of the early 2020s, these are still historically reasonable. NAR predicts a gradual decline in mortgage rates in 2025. Rates may stabilize or drop from the high levels seen in 2024, which is good news for buyers. Buyers should focus on securing pre-approval and locking in rates as soon as possible whenever favorable terms are available.

INVENTORY: SLOWLY IMPROVING

One bright spot for buyers is that housing inventory is expected as new construction ramps up in the spring and current homeowners consider selling. The current inventory shortage, exacerbated by homeowners locked into low mortgage rates and hesitant to sell, has contributed to rising prices and fewer options. While finding the perfect home will still take time, there should be more options than in recent years.

AFFORDABILITY: CHALLENGES

Affordability remains a big hurdle, especially in high-demand urban and suburban areas. To combat rising costs future buyers should consider expanding their search radius or exploring government programs designed to assist first-time buyers.

HOME VALUES: GROWTH BUT SLOWER

If you own a home, its value will likely continue to appreciate, but at a slower pace than in recent years. This gradual growth provides stability for those considering selling or leveraging their equity.

REFINANCING: A LIMITED WINDOW

If you haven’t refinanced yet, opportunities may be scarce. Homeowners with rates below the current market average are less likely to refinance unless rates drop unexpectedly. While NAR anticipates mortgage rates easing, current homeowners with rates locked in below 5% may still find refinancing unattractive. Monitor rate trends for opportunities to refinance if your current rate exceeds market averages.

PROPERTY TAXES AND INSURANCE

As home values rise, property taxes and insurance premiums may follow suit. Be proactive by checking for homestead exemptions or shopping around for competitive insurance rates to manage costs.

MONITOR YOUR EQUITY

With home values steadying, now is a good time to assess your equity. It could be a helpful tool for future investments, paying off debts or funding a big purchase like a child’s college education.

1. Tax Policy Changes

Any changes to mortgage interest deductions or property tax caps could impact affordability. For homeowners, these policy shifts could affect your tax returns, while buyers might need to adjust their financial planning.

2. Interest Rate Policy

The Federal Reserve’s approach to managing inflation will play a key role in determining mortgage rates. Buyers and homeowners should monitor economic policy announcements that could shift borrowing costs.

3. Affordable Housing and Inventory Growth

Efforts to expand affordable housing stock may gain momentum in 2025. Federal and state programs could provide more opportunities for first-time buyers through down payment assistance, tax credits or subsidized loans. Policymakers are considering initiatives to incentivize new construction, including tax incentives for builders and grants for affordable housing projects. Property Action will update you on legislation that could help make homeownership more accessible.

4. Zoning Reform

States and municipalities are increasingly revisiting zoning laws to encourage denser housing and mixed-use developments. If successful, these changes could lead to an increase in affordable housing options, especially in urban areas.

5. Climate Legislation

Increasing focus on energy efficiency and climate resilience could impact building codes and renovation costs. Tax credits for sustainable upgrades might offset some of these expenses for both buyers and current homeowners.

6. Rent Control and Tenant Protections

For those considering investment properties, new rent control measures and tenant-friendly legislation in various cities may influence where and how you invest.

Why Join Property Action?
Homeownership matters. By joining NAR's Property Action Center, you’ll be at the heart of advocating for helping all Americans achieve the dream of homeownership.

Together, we can amplify our collective voice to shape the policies and decisions that make that dream a reality. Here’s why you should sign up today:

Stay Informed: Get the latest updates on key issues, housing legislation, and essential resources, such as our First-Time Homebuyer Resources.
Be Heard: Participate in petitions, letter-writing campaigns and other direct advocacy actions.
Connect Locally: Learn about your state's housing events, news and campaigns.
Make an Impact: Every action you take — no matter how small — moves us closer to our shared goals.

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What You’ll Get as a Member of Property Action:

Education on many issues critical to homeownership, such as Tax Policy and Fair Housing laws.
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Political and Legislative Impacts to Watch

Final Thoughts: Plan, Don’t Despair