2025 Q1 Housing Market Trends: What Homebuyers and Sellers Need to Know

The start of a new year always brings questions about where the housing market is headed, and 2025 is no exception. While the first quarter is typically a quiet time in real estate, this year might break tradition. Let’s dive into what the experts predict and how you can navigate the market in the coming months.

Will Home Prices Drop? Not Likely.

Despite the winter season, high demand and low inventory are expected to keep home prices steady. According to the National Association of Realtors (NAR), the median home price rose by 4.7% year-over-year in November 2024, reaching $406,100. While price increases may slow, significant declines are unlikely.

Mortgage Rates: Slight Decrease, But No Major Shift

Good news for buyers and sellers: mortgage rates may ease slightly in the first quarter of 2025. Experts predict the average 30-year fixed rate will hover around 6.25% to 6.5%. While not a dramatic drop, these rates could help stabilize the market and support steady activity.

Inventory: Improving, But Still Tight

Housing supply is expected to see gradual improvement, thanks to new construction and more homeowners listing properties. However, the “lock-in” effect—where homeowners with low mortgage rates hesitate to sell—will keep inventory constrained. This means desirable homes priced competitively will still move quickly.

What Should Buyers Do Now?

If you’re shopping for a home, don’t wait for a dramatic market shift that may not come. Focus on what you can afford today.

• Be realistic about your budget: A smaller floor plan or a fixer-upper could get you into your desired neighborhood.
• Know your local market: Regional price variations can present opportunities.
• Act strategically: The early months of the year, before the spring market heats up, could offer competitive deals.

Tips for Sellers in Q1 2025

Sellers, while the market may still lean in your favor, patience and preparation are key:

1. Price your home wisely: Use local comps to set a competitive and realistic listing price.
2. Present your home at its best: Buyers are less likely to tackle major projects, so make your home as move-in ready as possible.
3. Adjust expectations: While demand is strong, the frenzy of past years has cooled, especially in higher price tiers.

The Big Picture

Q1 2025 is shaping up to be a transition period. While the market may not be ideal for dramatic moves, it’s full of opportunities for buyers and sellers who take a thoughtful, informed approach. Whether you’re looking to purchase your first home, upsize, or sell your current property, staying proactive and realistic will help you make the most of this dynamic market.

Looking for personalized advice? Let’s connect to explore the best strategy for your real estate goals in 2025!

Original article: Housing Market Trends For First Quarter 2025 | Bankrate