In 2024, the U.S. housing market experienced a dramatic slowdown, with soaring mortgage rates driving home sales to their lowest point in almost three decades. The year was also marked by minimal housing inventory and rising inflation, making affordability an even bigger challenge for potential homebuyers.
Halfway through 2025, the market outlook remains similar, but experts hope the 7% mortgage has stabilized and that buyers are ready to accept it as the new normal. Mortgage rates aren’t expected to increase, though they likely won’t decrease much, if at all, throughout the year either.
However, there are some signs that new inventory will trickle into the market, buoyed by homeowners previously held back by the “lock-in” effect, afraid to reenter the market as they might not be able to get a better interest rate than their current home.
The question remains for buyers and sellers who spent the past year on the sidelines: “How is the housing market right now?” We’ve put together a comprehensive guide to help you understand the current housing market and what the future may hold.
How Much Is Your Home Worth Now?
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2025: Buyers and sellers feel the strain
From fluctuating home prices to a rebound in inventory and stubborn interest rates, these are the trends we predict could shape the housing market for the rest of 2025.
A recession is looming
According to HomeLight’s Q2 Lender Survey Report, 63% of lenders surveyed believe the United States is headed for a recession; as a result, home buying will become much tougher by the end of the year.
“(It’s) definitely a mixed bag. Rates would come down, which would encourage buyers…those who have kept their jobs, anyway. But I doubt that will have any impact on the shortage of inventory that is out there,” Bill Staiger, a loan officer with more than 30 years of experience, said in the report.
According to J.P. Morgan Chase, home prices are also expected to rise, which predicts a 3% rise by the end of 2025.
Mortgage rates will remain high
By the end of 2024, mortgage rates had settled into the 6.5-7%% range and experts expect these rates to hold for most 2025. In fact, 47% of loan officers surveyed by HomeLight said that the high interest rate environment is making it increasingly difficult to close deals.
At the start of 2025, a 30-year fixed-rate mortgage averaged 7.04%, while a 15-year fixed-rate mortgage averaged 6.27%. As of June 2025, rates have dipped only slightly, down to 6.85% and 5.99%, respectively.
While prospective homeowners have hoped that rates will drop, experts believe that the current rate environment will persist, and buyers will need to adjust.
“They should decline some,” says Sam Khater, Freddie Mac’s Chief Economist, in comments to NPR. “But I think the new normal is 6 to 7% in this world of strong economic growth and steady inflation.”
Seller concessions are on the rise
As buyers show continued reluctance to cross the finish line of purchasing a home, sellers are more willing to offer up concessions as a way to entice buyers to sign on the dotted line. HomeLight’s Q2 Lender Survey report found that 21% of loan officers surveyed saw an increase in seller concessions.
A report from Redfin earlier this year also found a spike in seller concessions, with 44% of home sellers offering up concessions to buyers.
HomeLight’s recent Top Agent Insights report found that popular concessions include offering assistance with closing costs, covering repair costs or giving buyers repair credits, paying the buyer’s agent commissions, and funding interest rate buydowns for buyers.
Regional days on market are varying wildly
According to a recent Bloomberg report, previously booming markets like the Sunbelt are experiencing a slowdown, as the average days on the market for single-family homes is increasing.
According to the report, markets like Florida have seen the average DOM increase to a median of 73 days. This is an increase from 55 DOM in 2023, which is double the time it takes for homes to sell in markets like New Jersey and Virginia.
Despite this slowdown, real estate agents have noted that regions like the South Atlantic and South Central are still very much considered “Buyer’s Markets” according to HomeLight’s Top Agent Insights Report: AI Edition 2025.
Meanwhile, agents categorize regions like the Northeast and Midwest as “Seller’s Markets,” meaning that as a buyer, you will have less negotiating power in states like Massachusetts compared to Georgia, for example.
What does all this mean for home sellers?
Here are a few ways home sellers could benefit from the 2025 housing market:
Prices could drop as inventory stagnates
A looming recession, high mortgage rates, and other economic headwinds have left would-be buyers stranded on the sidelines, keeping housing inventory from moving. As a result, agents predict home prices will drop as sellers act to push buyers into completing transactions.
According to HomeLight’s recent Top Agents Insight Report, 82% of agents are seeing more home price reductions compared to this time in 2024. This is particularly true in the Mountain and Pacific regions of the country, attributed to unsustainable migration trends following the height of the pandemic.
Additionally, as sellers are more likely to offer concessions, buyers will have more bargaining power at the negotiating table, meaning you can get creative when it comes to getting a better deal on your possible future home.
Mortgage rates will remain high, but could get higher
While high mortgage rates are keeping buyers from entering the market, lenders and agents have told HomeLight that despite the concern, the best time to buy a home is still now, as interest rates and mortgage rates could get even higher.
“Take advantage of the market. Current sellers are listing because they have to sell; they are not testing the market with price. If you can afford a smaller home and build equity while taking advantage of the interest tax benefit, this will help when you are ready to upgrade to a larger home,” says Laura Uribe, a loan officer in Santa Clarita, California.
Indeed, according to The National Association of Realtors, the median home price in the United States is $403,700—a 2.7% increase from the previous year.
While prices are expected to dip in some markets, according to real estate agents, Fannie Mae predicts a 4% increase in home prices by the end of 2025, with a 2% hike expected by 2026. This means that those with existing equity.
What does all this mean for homebuyers?
Many prospective buyers who sat out the 2024 housing market are eager to make the attempt. However, affordability will still be a major concern, especially for first-time homebuyers. To get a better deal, it may be beneficial to consider the following strategies:
- Compromising on some wants: You may not get the exact home size, amenities, or upgrades that you want, especially as inventory remains painfully low. Working with a top-performing real estate agent can also increase the likelihood of your offer being accepted. Use HomeLight’s agent matching service to get referred to two or three top agents in your area who best suit your home-buying needs.
- Broadening your search area: This works incredibly well if you can work remotely. If you consider alternate locations and neighborhoods, you may find an affordable home more successfully.
- Exploring first-time home buyer assistance programs: We’ve put together a handy guide to first-time home buyer programs to help you get a foot on the property ladder. While several of these programs are available to homeowners across the country, you can learn more about state or city-specific programs by consulting a mortgage professional.
- Getting pre-approved for a mortgage: Before you begin your home search, you should get pre-approved for a mortgage to figure out how much house you can afford. (Hint: HomeLight’s Affordability Calculator can give you a general idea.) A mortgage preapproval is based on your finances and a credit check. Homebuyers with preapprovals are more attractive to sellers as it’s less likely that their financing will fall through once they submit an offer on a home.
Growing trend of digital real estate services
Digital real estate services, particularly AI, are changing how the industry operates. 80% of agents surveyed in our recent AI report, said that they use AI tools to generate listing descriptions or marketing copy.
“My AI Assistant helps make phone calls to all of my leads (buyers and sellers) and to showing agents to get feedback,” says Chattanooga, Tennessee, agent Paul Avratin.
“It’s also taking incoming texts and calls for info on my listings from my riders on my signs. I love how I can make the remarks about a home sound so much better than when I try to write them myself.”
More and more, consumers are taking advantage of fast, simple, and convenient online services, like those that HomeLight offers:
- Home Value Estimator: Get a ballpark idea of what your home is worth by answering a few simple questions.
- Affordability Calculator: Figure out how much home you can afford based on your income, savings, debts, credit score, and more.
- Net Proceeds Calculator: Estimate the cost of selling your home and how much you could earn from the sale.
- Agent Match: Connect with two to three top-performing agents in your desired market who fit your home buying — or selling — needs.
- Simple Sale: Get a competitive, all-cash offer for your home and close in as few as 10 days, with no repairs or prep work required. To get started, answer a few questions and you’ll receive a no-obligation offer in about a week.
- Buy Before You Sell: Unlock your home’s equity to purchase a new home with all cash and no contingencies. Sell your current home vacant with less hassle. Program available throughout the U.S. Visit our site or ask your agent about HomeLight Buy Before You Sell.
- Closing Costs Calculator: Get an idea of what your total closing costs will be when purchasing your dream home.
Another digital real estate service that continues to impact the industry is iBuying. iBuyers (the “i” stands for instant) have been around since the 2010s and are a solid option for home sellers seeking fast cash offers.
Unlike We Buy Houses for Cash companies, which tend to purchase homes as-is and pay around 70% of market value, iBuyers like Opendoor and Offerpad look for homes in good condition and pay around 90% of market value while charging fees for their services.
What else should you know about the 2025 housing market?
If I can’t find or afford a home, will it be wise to enter a rent-to-own agreement in 2025?
If you are struggling to come up with a down payment, have less-than-perfect credit, or don’t want to rent traditionally, a rent-to-own program might be a good fit for you. Always consult with an attorney before going this route, as many rent-to-own contracts strongly favor sellers.
If you’re home shopping while trying to figure out how to leverage your existing equity, consider HomeLight’s Buy Before You Sell program, which allows you to unlock part of your home’s equity to submit an all-cash offer on your dream home without a home sale contingency. You’ll be able to sell your home vacant (no need to worry about dipping out for showings!) and avoid the hassle of moving twice.
Get ahead of market trends: partner with an experienced top agent
There will be several competing forces that dictate how the market moves, including:
- Mortgage rates
- Home prices
- Housing inventory
- Inflation
- Labor market
Our Agent Match tool can help you find the perfect real estate agent. It analyzes millions of transactions, thousands of reviews, and other data points to find the best local agents for your needs. Whatever your needs are, HomeLight can connect you with a trusted professional today to give you peace of mind on your home-selling journey, ensuring that it is simple, certain, and satisfying.
Writer Dwayne Vega contributed to this article.
Header Image Source: (Joshua Rainey Photography / Shutterstock)
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