Housing market trends for the first quarter of 2025: what to expect
What to expect in the first quarter of 2025
The first quarter of the year is usually a slower period for real estate, due to cold weather and a preference for buyers and sellers to wait until closer to spring. Home inventories are expected to remain low until February, with a subsequent increase in March. According to Lawrence Yun, chief economist at the National Association of Realtors, home purchases and open-open home visits tend to rise starting in March. . CJ Patrick CEO Rick Charga expects the first quarter of 2025 to be a continuation of 2024, with relatively weak home sales and modest price increases. However, low mortgage rates can stimulate buyer activity.
Mortgage Rate Forecast for the First Quarter
Potential buyers have become more confident as mortgage interest rates fell from 23-year highs at the end of 2024. As of December 20, 2024, Bankrate's weekly national survey reported that the average 30-year mortgage rate is 6.88. Greg McBride, chief financial analyst at Bankrate, expects a 6.75 percent average for a 30-year fixed-rate mortgage loan this quarter. Despite some optimism, Shri Ganeshram, CEO of real estate investment site Awning, expects a slight increase in interest rates, likely to reach around 7.75 percent for 30-year loans.
Where is sales activity and house prices headed
While home sales are expected to improve in 2024, reaching 5.5 million units of new and existing home sales combined, according to Leon, the ongoing housing shortage could lead to a 2 to 4 percent increase in nationwide house prices in the first quarter. On the other hand, Sharjah expects home affordability to improve as mortgage rates trend down and wage growth of around 5 per cent per year.
Housing Inventory Forecast for the First Quarter
Shortages of housing stock remain a challenge for homebuyers, with demand continuing to outstrip supply. Mortgage applications increased in response to low interest rates, indicating a persistent supply shortage in 2025. Yun sees a positive side, predicting a rise in inventory by about 30 percent and more options for buyers in 2025. However, Sharjah believes that the supply of existing homes for sale is unlikely to rise significantly until mortgage rates fall further.
Strategies for Home Buyers and Sellers
With Fed Chairman Jerome Powell pointing to possible rate cuts, housing experts are optimistic about affordable mortgages. Buyers are advised to prepare for competitive markets, explore non-traditional financing options and act quickly based on purchase opportunities. Sellers should follow pricing best practices to ensure the highest price for their property, and price homes correctly from the start to avoid a recession.
Q&A Section
Q1: Will mortgage rates continue to decline throughout 2025?
A: Expectations point to a further decline in mortgage rates, with experts such as Greg McBride expecting continued declines.
Second question: How can buyers navigate competitive markets in the first quarter?
A: Buyers should explore non-traditional financing options and be prepared to act quickly on potential purchases.
Q3: Are house prices expected to decline in 2025?
A: No, experts expect a 2 to 4 percent increase in house prices nationwide due to the ongoing housing shortage.
Explore key trends in the housing market for the first quarter of 2025, from mortgage rate forecasts to sales activity and inventory forecasts. Get insights into buyer and seller strategies in a competitive marketplace. Stay informed and make smarter financial decisions in the evolving real estate landscape.