Expert Predictions for the 2025 Real Estate Market

By Mike Gray

When it comes to providing peerless customer service and fulfilling the needs of his clients, if Michael Gray tells you that “the sky’s the limit,” he’s not kidding. Formerly an airline pilot, where attention to detail and focus are crucial and following a process is absolutely necessary to achieve proper results, Mike learned early in his real estate career how well those skills transfer and how important they are to the buyers and sellers with whom he works.

The housing market has been unpredictable in recent years, with record highs and sudden drops. But here’s the good news: we now have a clear view of where things are heading in 2025. The wild swings are over, and the market is beginning to stabilize. Today, we’ll break down trends from 2019 to 2024 and provide an informed outlook for 2025. Whether you’re thinking about buying, selling, or investing, these insights will help you make an informed decision in your real estate journey.

The recent yearly real estate market trend. In 2019, home sales were steady at about 5.5 million homes sold, a balanced and healthy market. But the pandemic disrupted everything.

In 2020, sales dipped initially but quickly bounced back, hitting 5.6 million homes. The rebound was fueled by historically low mortgage rates and a significant shift toward remote work, which led many people to seek more space and stability in homeownership.

In 2021, the market saw a record-breaking 6.1 million homes sold, driven by those low rates and the continuation of remote work trends. By 2022, the Federal Reserve raised rates to combat inflation, cooling the market. Sales dropped to around 5 million. In 2023, higher mortgage rates and low inventory caused sales to fall to 4.5 million, and for 2024, we expect around 4.3 million homes to be sold, signaling that the market is stabilizing.

What can we expect in 2025? There’s a range of predictions for 2025, with some experts forecasting sales as low as 3.8 million and others predicting a rise to 5.8 million. Based on current trends, we expect around 4.2 million homes to be sold, similar to last year.

While not a huge change, this is still below the “normal” range of 5 million to 5.5 million, indicating that while the market is stabilizing, it hasn’t fully returned to pre-pandemic levels.

Price appreciation and mortgage rates. Home prices are expected to increase by about 3.5% in 2025. This isn’t a massive surge but a sign of gradual stability. While the market will remain tight, inventory should gradually increase as more sellers enter the market. Mortgage rates remain a key factor.

While they’re high now, rates are expected to drop slightly in 2025, potentially reaching around 6.5%. This is better than the 7%+ rates we’ve seen recently but still far from the ultra-low rates of 2.5% and 3% we experienced during the pandemic.

What do you need to know as an investor? If mortgage rates drop below 6%, we could see a surge in market activity. A more stable market with rates at 6.5% could lead to steady sales and modest price increases.

For investors, this means a good opportunity for both buying and selling. Lower rates provide better affordability, potentially driving up demand, while higher rates help keep home prices steady and create opportunities to buy properties at more favorable terms.

The 2025 housing market will be much more predictable than in recent years. While it may not be as dramatic as in the past, staying on top of mortgage rate trends is still crucial. If rates fall below 6%, we could see a market boom. It’s important to stay informed and adjust your strategy to navigate these changing conditions.

If you’re looking for expert guidance on how to best approach the 2025 market, feel free to reach out. Whether you’re looking to buy, sell, or simply understand the trends better, you can call or text me at 832-428-6453. You can also send me an email at mike@themikegrayteam.com. I will guide you on maximizing the current market conditions to optimize your real estate investments.