Forecast Predicts 2% Increase in Median Home Prices in 2025 and 2026
The National Association of Realtors has released its latest forecast indicating that home prices are expected to climb by 2% in 2025 and an additional 2% in 2026. According to the group’s economist, Lawrence Yun, the median U.S. home price is projected to reach $410,700 in 2025, up from $406,100 in November.
Yun stated that the growth in home prices may be more modest in the coming years, allowing income to catch up with housing costs. He also expected the Federal Reserve to maintain a gradual approach to easing monetary policy in 2025.
The forecast predicts that mortgage rates will stabilize around 6% in 2025, which is expected to become the “new normal.” This stabilization in borrowing costs is anticipated to attract more buyers to the market, with the association projecting 4.5 million existing-home sales in 2025.
Despite a national housing shortage, inventory levels are gradually improving, with more new construction projects and homeowners listing their properties. The increase in inventory is expected to lead to more construction, with housing starts reaching 1.45 million units in the next couple of years.
Yun believes that these market conditions will make it easier for home buyers to achieve homeownership in the coming years. He stated, “The worst of the affordability challenges are over as more inventory, stable mortgage rates, and continued job and income growth pave the way for more Americans to become homeowners.”
Overall, the forecast paints a positive picture for the housing market in the years ahead, with increasing affordability and a healthy balance between supply and demand.
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