January 2025 Housing Market Forecast: What Buyers & Sellers Need to Know
The January 2025 Housing Forecast brings key insights into what’s happening in the real estate market, with predictions on home sales, mortgage rates, and housing starts. Whether you’re looking to buy, sell, or invest, here’s a breakdown of what you need to know.
Housing Market Overview
The market continues to show signs of moderate adjustments, with total housing starts forecasted to slightly decline before stabilizing:
Total Housing Starts (new home construction) are expected to drop 2.7% YoY before rebounding with a 3.7% increase in 2026.
Single-Family Home Construction is forecasted to dip slightly (-1.2% YoY) but is projected to stabilize by year-end.
Multifamily Construction (apartment buildings & condos) is expected to decrease significantly (-6.9% YoY) before a possible rebound in 2026.
What This Means:
For buyers, this could mean fewer new construction homes hitting the market in the short term.
For sellers, limited supply could keep home values steady, making now a good time to list before more competition returns.
Home Sales Trends
The total number of home sales is expected to rebound in 2025, with:
A 3.0% increase in 2025 and a 7.3% jump in 2026, signaling a more active market ahead.
New home sales projected to grow 7.1% YoY, showing increasing demand for new construction despite supply challenges.
Existing home sales are expected to increase 2.3% YoY in 2025, with a stronger recovery in 2026 (+8.4%).
What This Means:
Buyers may face more competition as demand rises, especially for new construction homes.
Sellers could see increased interest, especially in early 2025 before the market becomes more competitive.
Home Prices & Affordability
The Fannie Mae Home Price Index (HPI) shows home prices continuing to grow, but at a slower pace:
5.5% growth in 2024
3.5% in 2025
1.7% in 2026
This suggests that home prices will not drop significantly but may appreciate at a more manageable pace.
What This Means:
Buyers might not see drastic price drops but could find opportunities in less competitive markets.
Sellers should consider listing sooner rather than later to capitalize on current price growth before appreciation slows.
Mortgage Rates Outlook
30-Year Fixed Mortgage Rates are expected to hover around 6.4%-6.7% throughout 2025, slightly easing from 6.8% in 2024.
Refinancing activity is expected to grow gradually as rates stabilize, increasing from 23% refinance share in 2024 to 30% in 2026.
What This Means:
Buyers may want to lock in rates early before further economic shifts.
Refinancing could become more attractive if rates dip lower than expected.
Final Takeaways: Should You Buy or Sell in 2025?
If you're a buyer → Expect a steadier market with more homes available as the year progresses. Prices will continue rising, but at a slower pace.
If you're a seller → You may benefit from strong demand early in the year before more listings hit the market.
If you're an investor → Multifamily properties may present opportunities in late 2025 as demand for rentals continues to grow.