2025 Housing Market Predictions: What’s Ahead for Kansas City Homebuyers and Sellers
The 2024 housing market was marked by chaos and challenges, particularly for potential homebuyers who often described the market as unaffordable. As we look toward 2025, economists anticipate a continuation of high mortgage rates and elevated home prices, but there are glimmers of hope for slight improvements. This article explores what industry experts predict for the upcoming year in the housing market.
Mortgage Rates: A Gradual Decline
Economists largely expect mortgage rates to decrease in 2025, although predictions have been tempered compared to earlier forecasts. Mortgage Bankers Association (MBA) anticipates the average 30-year fixed rate will hover around 6.5% for the year, slightly down from 6.6% in 2024. Similarly, the National Association of REALTORS® (NAR) expects rates to stabilize between 5.75% and 6.25% by mid-2025, but a large federal deficit may limit further reductions.
Realtor.com forecasts rates to remain in the 6.3%–6.5% range, while the National Association of Home Builders (NAHB) projects rates to reach closer to 6% by the year’s end. Economists emphasize that factors like economic growth, federal budget decisions, and labor market performance will play key roles in determining how quickly rates decline.
Home Sales: A Gradual Rebound
The housing market is expected to see a modest recovery in sales volume in 2025. NAR forecasts existing-home sales will rise by 9%, with new-home sales increasing by 11%. Realtor.com offers a more conservative estimate, projecting a 1.5% increase in existing-home sales.
Lower mortgage rates, increased inventory, and steady price appreciation could spur more transactions, although sales levels will likely remain below pre-pandemic norms. First-time buyers may represent a larger share of purchases, supported by slightly improved affordability and demographic shifts as millennials reach prime home-buying age.
Housing Prices: Slower Growth but Still Elevated
Home prices will continue to rise in 2025, but at a slower pace. MBA forecasts median existing-home prices will climb to $411,200 (a 1.31% increase), while Realtor.com anticipates 3%–4% national price growth. NAR expects the median home price to reach $410,000, up 2% from 2024.
Affordability will improve slightly as mortgage rates stabilize and household incomes grow modestly. However, regional variations will persist, with Southern and Western cities like Miami, Phoenix, and Atlanta seeing stronger price growth.
New Construction and Inventory: A Positive Outlook
Builders are projected to ramp up new construction in response to inventory shortages. NAHB predicts 1.42 million housing starts in 2025, with single-family construction leading the charge. Realtor.com anticipates an 11.7% increase in active listings compared to 2024, offering some relief to buyers facing limited options.
Economic and Policy Considerations
Economic policies under a new Trump administration could significantly impact the housing market. Proposed tariffs and deportation policies could increase construction costs and exacerbate labor shortages. Additionally, federal budget deficits may limit mortgage rate reductions, affecting affordability.
Final Thoughts: A New Normal
The 2025 housing market is expected to take slow but steady steps toward normalcy. While affordability challenges will persist, the gradual stabilization of mortgage rates and home-price growth could encourage more buyers to enter the market. However, uncertainties like federal policy changes and economic shifts remain key variables to watch.
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