The housing market has been a wild ride for buyers and sellers alike. Mortgage rates hovered near 7% for most of 2024 before dipping to 6.7% by year-end following multiple Fed rate cuts. As of March, Freddie Mac reported the average 30-year mortgage rate at 6.65% and the 15-year mortgage rate at 5.8%, offering a slight reprieve but still posing challenges for many buyers.
At its March meeting, the Federal Reserve held the federal funds rates steady at 4.25% to 4.5%, a key benchmark that influences borrowing costs across the economy. While the Fed doesn’t directly set mortgage rates, its policies impact lender borrowing costs, which in turn affect mortgage interest rates. When the Fed signals future rate cuts or hikes, mortgage rates typically adjust in response, influencing affordability for homebuyers and refinancing homeowners.
While inventory levels have improved, they remain below what's needed for a balanced market. With economic uncertainty and the potential impact of President Trump's recent trade policies and tariffs, many homeowners are asking: Will 2025 be a good year to sell? Here's what to expect.
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Mortgage rates: Gradual improvements expected
While the dip in interest rates offers some relief, they remain significantly higher than the ultra-low levels seen during the pandemic. While the Fed decided to keep rates steady, they hinted at potential federal funds rate cuts later in 2025 — a promising sign for sellers, as lower rates could bring more buyers back into the market.
Though rates are unlikely to return to the historic lows of 2021, they are moving closer to historical norms. Even a small decrease in mortgage interest rates could encourage buyers to enter the market, creating more opportunities for sellers. To find current mortgage rates, see our story on the best 30-year mortgage rates.
For homeowners considering selling, lower mortgage rates could ignite buyer interest and boost demand. As borrowing costs decrease, more first-time buyers may feel confident entering the market, potentially accelerating sales and contributing to improved market conditions.
Use our tool below to compare current mortgage interest rates.
Housing inventory levels: Still tight but improving
Home sales fell 4.9% in January, but despite the monthly decline, they were still 2.0% higher than a year ago, marking the fourth consecutive month of year-over-year growth, according to the National Association of Realtors (NAR).
NAR Chief Economist Lawrence Yun noted that "Mortgage rates have refused to budge for several months despite multiple rounds of short-term interest rate cuts by the Federal Reserve. When combined with elevated home prices, housing affordability remains a major challenge."
Home prices continued their upward trend, with the median home sales price rising 4.8% to $396,900 — the 19th straight month of annual price increases.
Meanwhile, housing inventory saw a modest boost, increasing 3.5% from the previous month to 1.18 million available homes, representing 3.5 months’ supply at the current sales pace. While this uptick signals progress, it still falls short of the 5 to 6-month supply typically needed for a balanced market.
On the new construction front, homebuilders had been growing more optimistic as reduced financing costs boosted confidence and raised hopes for increased housing supply in 2025. However, the Trump administration’s 25% tariffs on steel and aluminum imports have added uncertainty to new construction plans. Rising material costs could slow development, potentially limiting efforts to expand housing supply in the coming year.
For sellers, improved inventory may mean more competition but demand continues to outpace supply in many regions. Well-priced, well-maintained homes will likely attract strong interest, especially in high-demand areas with limited inventory.
However, sellers should be prepared for a real estate market that is gradually shifting toward balance, where buyers may have more options and negotiating power than in recent years.
Buyer demographics will shape the housing market in 2025
Buyer demographics are set to play an important role in shaping housing demands in 2025. Millennials, now in their prime homebuying years, continue to dominate the market, often looking for larger homes to accommodate growing families. Meanwhile, Gen Z is stepping into the market as first-time buyers, and they’re looking for affordable properties and locations that support the remote work lifestyle.
In addition, multigenerational living is on the rise, with families pooling resources to navigate high housing costs. This trend is driving demand for homes with extra space, such as properties with in-law suites.
For sellers, tailoring marketing strategies to highlight features that resonate with these groups can be an effective way to maximize interest and secure the best possible sale price.
Home prices: Slower growth expected in 2025
Among major U.S. regions, the South led in single-family home sales, accounting for 45.1% of transactions in the fourth quarter, with prices rising 2.1% year-over-year. The Northeast saw the largest price jump at 10.6%, followed by an 8.0% increase in the Midwest and a 4.0% rise in the West.
According to Realtor.com’s housing market predictions, cities such as Charlotte, Denver and Miami are expected to lead in price growth. Markets like Baltimore and Des Moines, which have seen inventory gains, may experience more balanced market conditions or slight price dips.
For sellers, this means that while home values are still appreciating, the rapid price gains of recent years are slowing. Knowing how to price your home when selling and understanding local market conditions will be essential to attracting buyers in 2025.
Working with experienced real estate professionals can help sellers navigate these regional differences and position their homes competitively.
Political and economic factors in the housing market
The 2025 housing market will be heavily influenced by broader economic conditions. Job growth, inflation trends and the Federal Reserve’s monetary policy will shape whether the market becomes more favorable for buyers and sellers.
On the political side, it’s still too early to tell how the newly imposed tariffs will impact the real estate market. While higher material costs could slow new construction, the broader effects on affordability and supply remain uncertain.
A new administration’s policies can directly impact housing. Changes to tax laws, mortgage regulations or incentives for homebuilders might affect affordability and supply. For example, measures to increase affordable housing or ease zoning restrictions could help address inventory shortages. At the same time, infrastructure investments might drive demand in certain regions, creating localized market shifts.
Should you sell your house in 2025?
Rising buyer demand could create great opportunities for sellers who’ve been waiting for the right time to list their homes for sale. While property values are expected to grow slowly this year, there’s still potential for gains, making 2025 a promising year for many sellers.
Affordability challenges and economic uncertainty might still pose hurdles for sellers in the new year. However, it’s essential to remember that the best time to sell your house is when you’re ready — both financially and emotionally.
Staying up to date on market trends at both the national and local levels and working with trusted professionals can provide valuable guidance through the home sale process. With a well-thought-out pricing strategy and a willingness to adapt, sellers can set themselves up for a successful sale in 2025.
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