Let’s be honest: The 2024 housing market wasn’t exactly kind to prospective buyers looking to purchase a home. Mortgage interest rates were primarily in the 6.5%–7.5% range, prices continued to rise, and inventory remained tight. Added up, it meant the average buyer struggled to find the home of their dreams and if they did, there were affordability hurdles to overcome.

So, what will 2025 bring? According to housing experts and the industry’s leading trade associations, some of last year’s challenges will persist. However, many are also predicting that this year’s market will provide more opportunities for prospective buyers. Read on to learn more.

For-sale inventory will rise 11.7%

Realtor.com® is forecasting that mortgage rates will average 6.3% throughout 2025 before ending the year at 6.3%. The leading real estate website also predicted that existing for-sale inventory will be 11.7% higher than in 2024. Realtor.com believes that the downward pressure on price growth due to this boost in housing stock will win out over the upward pressure on price growth from slightly lower rates. The result will be a 3.7% increase in home prices, likely lower than it would be without the increase in inventory.

Overall, Realtor.com® is expecting the most buyer-friendly market since 2016, thanks primarily to an uncommonly slow seasonal market, the highest for-sale inventory in more than five years, and price cuts for approximately 20% of all listings. 

Fewer locked-in homeowners

The National Association of REALTORS® (NAR) is similarly forecasting more opportunities for prospective buyers. At its annual Real Estate Forecast Summit, the NAR predicted that more Americans would fulfill their dreams of homeownership thanks to upticks in new listings and a moderation in price growth.

The NAR also detailed the top factors that will drive home sales in the country’s top metros:

• Fewer locked-in homeowners. More stable mortgage interest rates are expected to persuade homeowners with locked-in low rates of 2% to 3% to enter the market.
• More households reaching buying age. According to the NAR research, the typical first-time buyer is 38 years old. The NAR believes that areas with a larger share of households entering this age bracket will see growing demand.
• Financially secure renters & more affordable options. Metros with high numbers of lower-cost properties and young renters who can afford homeownership may see an uptick in demand.
• Higher share of starter homes. According to NAR data, starter homes are typically priced at 85% of an area’s median home price. Therefore, the NAR expects areas with lower-cost options to provide greater homeownership accessibility.

Modest growth in home sales

Zillow is predicting that buying activity will experience a much-welcomed boost even as interest rates continue their recent up-and-down pattern. Here are the key takeaways from the listing site’s 2025 forecast:

• Home sales will see modest growth. Zillow expects sales to hit 4.3 million, up slightly from 2023’s 4.1 million and last year’s projected total of 4 million. The listing site also predicted that home values will grow 2.6%. While this does mean that affordability challenges will persist, Zillow believes that more properties will hit the market, giving buyers better leverage in negotiations.
• Mortgage rates will remain volatile. After crossing the 7.5% threshold in late April, rates steadily fell throughout the summer before shooting back up in again starting in early October. More swings like this are expected in 2025. “Those hoping to buy—or even refinance—should buckle up for a bumpy ride and stay ready to move when conditions are right,” said Zillow Chief Economist Skylar Olsen.
• Americans will continue to embrace smaller living. Zillow believes the post-pandemic preference for homes with less square footage will persist in 2025. For example, the term “cozy” appeared in 35% more listing descriptions this year compared to 2023.

Staying connected in our industry’s new normal

In addition to challenging market conditions, 2025 will deliver changes to how loan officers and real estate professionals build, nurture, and maintain their relationships. Back in August, the NAR reached a settlement in a class action lawsuit that resulted in changes to buyer-broker fees in real estate transactions. The lower commissions are expected to force many real estate professionals to leave the industry. In fact, the NAR predicted that its membership would decline by as much as 10%. 

What it all means is that strong relationships between loan officers and real estate professionals are more essential than ever. Here are three tips for forging deeper connections in the real estate industry’s new normal.

• Communicate effectively. Any successful relationship is based on clear and consistent communication. Real estate relationships are no different. Give out your cell phone number in addition to your office number. Respond to text messages as you receive them. And never let emails go unanswered for longer than 30 minutes.
• Hold yourself accountable. Working in the real estate industry can be challenging and unpredictable. You frequently need to adapt to unexpected situations and remain flexible in the face of change. This is why accountability is a key element of any successful relationship. By holding yourself accountable, you help ensure that tasks are completed as promised, errors are promptly corrected, and goals are met without constant oversight.
• Work together. Never forget that you and your industry connections are on the same team working toward the same goals. Fostering such a collaborative spirit will help set you on a trajectory of success.

Here’s to a successful 2025 for all of us.