NAR's Real Estate Forecast Summit Reveals Rebound Forecast In 2025 – 'The Worst Of The Affordability Challenges Are Over'

Home sales will rebound in 2025 as mortgage rates stabilize and inventory expands, according to forecasts presented at the National Association of Realtors’ Real Estate Forecast Summit earlier this month.

NAR projects existing home sales to rise 7% to 12% in 2025, following a 15-year low in summer 2024. New home sales should climb 11%, with median home prices increasing 2% to $410,700.

“Homebuyers will have more success next year,” NAR’s chief economist Lawrence Yun told summit attendees. “The worst of the affordability challenges are over as more inventory, stable mortgage rates and continued job and income growth pave the way for more Americans to achieve homeownership.”

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Mortgage rates near 6% in 2025 could open homeownership to 6.2 million more prospective buyers compared to when rates topped 7%, NAR research shows.

Housing inventories rose 20% annually in October, with further gains expected as homeowners respond to stabilizing rates. “I’m most optimistic about the growing inventory,” Danielle Hale, realtor.com’s chief economist, said. “That’s going to make the market better not just for buyers but also sellers – many of whom turn around and become buyers, too.”

New construction should reach 1.5 million units annually over the next two years. Robert Dietz, chief economist at the National Association of homebuilders, noted that builders are increasingly focusing on exurbs and outer suburbs, with two-thirds offering sales incentives like rate buydowns and upgrades.

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The MBA predicts 20% growth in mortgage originations from 2024 to 2025. “I’m optimistic about the spring of 2025 – all the factors are lining up that we could really see increases,” Michael Frantantoni, MBA’s chief economist, said.

Homeowner equity continues rising, pushing median net worth to $415,000 versus $10,000 for renters. According to Jessica Lautz, NAR’s deputy chief economist, one-third of repeat buyers now make all-cash purchases using home equity, contributing to 2024’s record 26% cash-buyer share.

First-time buyers face ongoing hurdles, with their market share hitting a record low of 24% in 2024. However, slower price growth, income gains and increased inventory may ease entry barriers in 2025.

NAR forecasts job gains near two million annually through 2026, with mortgage rates holding around 6%. “By historical standards, it’s still below the long-term average of 7%,” Yun said.

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