Punxsutawney Phil may have seen his shadow on February 2, predicting six more weeks of winter, but this groundhog only has a 39% success rate – which means there’s a good chance that Spring will arrive sooner (at least that’s what we’re hoping!). Either way, now is a good time to take a look at the outlook for the housing market in 2025.

Traditionally, spring and early summer are considered the best times of year to sell a house. Warmer weather and the end of the school year make it easier for buyers to shop for homes. After all, who wants to tromp through the snow and ice! In addition, many families need to be in their new home by the start of the school year and begin their search early.

Home Price Outlook for 2025

While the ice and snow may be melting, experts predict that the housing market will remain frozen in 2025. According to J.P. Morgan Research:

• While the inventory of homes for sale has increased slightly, the supply of houses remains tight nationally, as people continue to stay “locked in” to low mortgage rates.
• Market demand is being seriously suppressed by interest rates (mortgage rates are expected to hover between 6-7% this year).
• House prices are expected to rise by 3% overall in 2025. The median sale price for an existing home in the U.S. hit a record high of $426,900 in June 2024, according to the National Association of Realtors, and though prices have dipped slightly since then, they remain higher than last year.
• There are signs that these trends may be improving slightly in the coming months, but many experts believe 2025 will be another challenging year for the U.S. housing market.

Will 2025 be a Buyer’s or Seller’s Market?

According to Bankrate, 2025 is likely to remain a seller’s market in most areas. While the housing market has improved slightly for buyers, supply remains tight. Limited inventory results in a seller’s market, meaning sellers are in a better position of leverage as buyers compete for available homes. The good news is that inventories and demand appear to be coming more into balance (although slowly).

The bottom line: “The continued combination of high mortgage rates, steep home prices and insufficient inventory levels points to 2025 being another tough year for both buyers and sellers,” said Greg McBride, Chief Financial Analyst for Bankrate. “However, many buyers seem to no longer be holding out for lower rates, as seen by a slight uptick in sales recently, which could hint at more movement in the market in 2025 than there was last year.”

Of course, not everyone is in a position to wait until trends improve. Job changes, a growing family, retirement, and other factors may make selling and/or buying a new home necessary, despite market trends. Spring is typically a busy time for home sales, with rising prices due to high demand. However, there’s usually a larger selection of homes to choose from. Considering the complexities of the current market conditions, it’s a good idea to rely on the expertise and guidance of an experienced real estate agent.

Some Other Interesting Trends to Watch For

Besides home prices and mortgage rates, the real estate market is seeing some other trends start to emerge like the first flowers of spring. For instance, Zillow is seeing an increase in “small space living.” Amanda Pendleton, Home Trends Expert for Zillow says, “We’re seeing that the term ‘cozy’ is no longer a negative real estate euphemism – it’s a sought-after design trait. Home buyers are embracing smaller, cozier spaces for affordability and sustainability.”

Color is also making a comeback in paint, wallpaper, tile, and textiles. The years of white or beige walls and neutral decorating may be coming to an end, as people are looking for ways to brighten things up. And after a long period of “minimalism,” we’re starting to see a return to cozier, collected spaces.

Finally, we are seeing more people heading back to city centers. Urban areas are experiencing the largest uptick in a decade!

Whether you’re looking to downsize or need more room for a growing family; or you’re ready for a change and want to live an urban lifestyle, let an experienced real estate agent help you navigate the market and find the perfect home for you.