What 2025 could hold for the housing market

Here's what experts and industry pros predict is in store next year for mortgage rates, new builds, moves, and more.

Rates will remain above 6%

U.S. mortgage rates are expected to be in the low- to mid-6% range at the end of 2025, according to Realtor.com chief economist Danielle Hale.

• Redfin's economists forecast rates to stay higher, near 7%.

Between the lines: "We're not going to see a big change in the affordability picture," Hale tells Axios.

• "It's still going to be challenging to get into the housing market," especially for first-time buyers, she says.

Lower mortgage rates "could even exacerbate" the country's housing crunch, Josh Altman, real estate agent and former cast member of "Million Dollar Listing L.A.," tells Axios.

• That's because "as mortgages become more affordable, more buyers are going to enter the market, creating greater competition and ultimately higher home prices," says Altman, who's also co-founder of Redy, a platform for home sellers and agents.

More new homes

Chief economist Lawrence Yun at the National Association of Realtors expects more single-family new builds.

• "There is still a housing shortage, and homebuilders are making good profits to continue expansion," he says.

Fewer "locked-in" homeowners

The mortgage "lock-in" effect, which has contributed to the housing market's woes by discouraging homeowners from moving, won't disappear next year — but it will lessen, Hale says.

By the numbers: In mid-2024, 84% of homeowners with a mortgage had a rate under 6%, down from 89% a year earlier, per a Realtor.com analysis.

• Hale expects that share to fall to 75% by the end of 2025, as more people choose to part with their current home loan.

Real estate for the rich

The luxury housing market thrived this year, in part because wealthy homebuyers are less hampered by expensive mortgages.

What's next: That trend will likely continue in 2025, according to Mauricio Umansky, CEO of boutique brokerage The Agency and TV personality.

What they're saying: "I expect steady growth as high-net-worth individuals continue to view property as a valuable, resilient asset," Umansky tells Axios.

More rent increases

As renters postpone house purchases, increased apartment demand and less new apartment construction pave the way for landlords to raise rents.

Case in point: "Probably the biggest story this year that we've seen [is] from people coming in the front door and then not leaving [out] the back door," Joe Fisher, president of publicly traded apartment owner UDR, told The Wall Street Journal.

Realtor group's uncertainty

Justice Department concerns didn't stop a judge from approving the National Association of Realtors' commission lawsuit settlement in November.

Zoom in: Federal prosecutors said a provision requiring homebuyers and their agents to sign a written agreement before touring homes could "limit how brokers compete for clients."

• The Department of Justice has also scrutinized other real estate industry practices.

What we're watching: Realtors are nervous the DOJ might step in later because the judge ignored the department's objection, CNN reports.