Housing Market Predictions 2025 by NAR Chief Economist Lawrence Yun

The real estate world is always buzzing with questions about what's around the corner, and when it comes to housing market predictions for 2025, we've got some insightful answers. According to NAR's Chief Economist, Lawrence Yun, while things have felt a bit slow lately, we can expect a brighter picture for home sales next year, thanks to dipping mortgage rates and a healthier supply of homes.

It's a question on everyone's mind: what will 2025 hold for those looking to buy or sell a home? As someone who's spent years in this industry, watching trends and listening to the smartest minds, I'm always keen to see what the National Association of REALTORS® (NAR) has to say. Lawrence Yun's forecasts are always a big deal because he digs deep into the numbers and gives us a clear view of the road ahead.

Housing Market Predictions 2025 by NAR Chief Lawrence Yun

The Current Scene: A Bit of a Stumble, But Not a Fall

Before we dive into 2025, let's quickly look at where we are now. As Yun points out, home sales have been “sluggish” for the past few years. This isn't a surprise to anyone who's been following the market. Two big culprits have been high mortgage rates – making monthly payments stretch much thinner – and a limited inventory of homes available for sale. It’s like trying to find a specific book in a library with very few shelves.

But here's the positive spin Yun offers, and it's a crucial one: mortgage rates are starting to come down, and more homes are appearing on the market. This combination is the recipe for a livelier housing market. Think of it as the library finally getting new shelves and a fresh shipment of books.

What Yun Sees for 2025: A Gentler Climb

So, what exactly does Lawrence Yun predict will happen in 2025? He's optimistic, but it's a grounded optimism.

• Boosting Sales: The biggest takeaway is that the declining mortgage rates and increasing inventory are expected to significantly boost home sales throughout 2025. This means more people will be able to afford their dream homes, and more sellers will find ready buyers.

• The Upper End Shines: Yun notes that record-high housing wealth and a booming stock market are giving current homeowners more power. This means those looking to trade up or buy more luxurious properties are in a good position. Their existing home equity and investments can help fund their next purchase. This segment of the market is likely to see a good amount of activity.

• The Challenge of Affordability: However, there's a flip side to this coin. Yun also highlights that sales of affordable homes are being held back by the lack of inventory. Even with lower interest rates, if there aren't enough starter homes or well-priced options, buyers in this bracket will continue to face difficulties. This is a persistent issue that the market needs to address.

Where Are the Deals? The Midwest Advantage

When I look at market data, I always try to understand the why behind the trends. Yun’s observation about the Midwest is particularly telling. He points out that the Midwest was the best-performing region recently, and the reason is straightforward: relatively affordable market conditions.

To break this down further, the median home price in the Midwest is a solid 22 percent below the national median price. This affordability is a magnet for buyers who might be priced out of other, more expensive regions. When you combine this inherent affordability with the general market improvements Yun predicts for 2025, the Midwest could see even more interest.

Digging Deeper: The Latest Data and What It Means

To get a real feel for where we're headed, it's essential to look at current data. The NAR's Existing-Home Sales Report for August (released September 25, 2025) gives us some crucial clues.

Let's look at the snapshots provided:

August 2025: A Closer Look

Metric	Month-over-Month Change	Year-over-Year Change	Key Figures
Existing-Home Sales	-0.2%	+1.8%	Seasonally adjusted annual rate of 4.0 million
Unsold Inventory	-1.3%	+11.7%	1.53 million units, representing a 4.6-month supply
Median Existing-Home Price	N/A	+2.0%	$422,600

My Take: The month-over-month sales dip might seem concerning, but the year-over-year increase of 1.8% is a more significant indicator of underlying strength. More importantly, the inventory is up a substantial 11.7% compared to last year. This is great news for buyers, as more choices usually lead to less frantic bidding wars. The median price still climbing is a sign of continued demand, even with higher rates.

Single-Family Homes vs. Condos

• Single-Family Homes: Saw a 0.3% decrease in sales month-over-month but a 2.5% increase year-over-year. The median price is up 1.9% to $427,800. This tells me the demand for traditional homes remains strong, and prices are still creeping up.
• Condominiums and Co-ops: Sales were flat month-over-month, but down 5.1% year-over-year. The median price saw a modest 0.6% increase to $366,800. This might indicate that while condos are more affordable, the overall trend for them isn't as robust as single-family homes right now, potentially due to changing lifestyle preferences post-pandemic.

Regional Performance in August 2025

Here's how different parts of the country fared:

• Northeast: Sales down 4.0% month-over-month and 2.0% year-over-year. Prices are up 6.2% to $534,200. This region is still expensive, and sales seem to be cooling off a bit.
• Midwest: Sales up 2.1% month-over-month and 3.2% year-over-year. Prices are up 4.5% to $330,500. This confirms Yun's point – affordability is driving sales here.
• South: Sales down 1.1% month-over-month but up 3.4% year-over-year. Prices are up 0.4% to $364,100. A mixed bag, but the year-over-year growth is positive.
• West: Sales up 1.4% month-over-month but down 1.4% year-over-year. Prices are up 0.6% to $624,300. The West remains the priciest region, and while some sales are picking up, overall activity is a bit slower year-over-year recently.

My Thoughts on Regions: The data strongly supports Yun's emphasis on the Midwest's affordability. Buyers looking for value are increasingly looking there. The West's high prices continue to be a barrier, even with slight sales upticks.

Other Important Indicators

• Time on Market: Properties are taking a median of 31 days to sell, up from 28 days last month and 26 days last year. This is a clear sign that buyers have more negotiating power.
• First-Time Homebuyers: 28% of sales were to first-time buyers, unchanged from July and up from 26% last year. This indicates that despite challenges, the market is still accessible for those entering homeownership.
• Cash Sales & Investor Activity: 28% of transactions were cash sales, down from last month but up from last year. 21% were by individual investors, up slightly. This suggests that while individuals are still buying with cash, institutions might be pulling back slightly, and individual investors see opportunities.
• Distressed Sales: 2% of sales were distressed properties (foreclosures, short sales), which is a very low number. This indicates a healthy market with minimal distress.

Mortgage Rates: The Key Player

And then there are the mortgage rates. In August, the average 30-year fixed-rate mortgage was 6.59%, down from 6.72% in July and only slightly higher than 6.50% a year ago. This downward trend is critical for the 2025 predictions. As rates continue to ease, more buyers will qualify for loans, and their purchasing power will increase.

My Personal Take on the 2025 Outlook

From where I stand, Lawrence Yun's Housing Market Predictions 2025 paint a picture of a market that’s healing and finding its balance. The days of sky-high appreciation might be behind us for a bit, and that’s actually a good thing for long-term stability.

I believe we’ll see a more normalized market in 2025.

• Buyers: You’ll likely have more options and more time to make decisions. The pressure to offer above asking price on every single home will lessen, especially outside of the most competitive areas. Keep an eye on those declining mortgage rates – they are your biggest ally.
• Sellers: While bidding wars might not be as common as they were a couple of years ago, well-priced and well-maintained homes will still sell. Your strategy will need to focus on presenting your home in the best possible light and being realistic about pricing based on current market conditions.
• Affordability: This will continue to be a theme. Regions like the Midwest will likely see sustained interest. For those looking in hotter markets, creative financing or looking at the next tier of towns might be the way to go.
• The “Trade-Up” Market: Yun's point about those with existing home equity is important. This segment will likely drive a good portion of sales, as people are looking to upgrade their living situations now that their financial footing is stronger.

The housing market is a complex beast, influenced by many factors. But based on the data and the expertise of someone like Lawrence Yun, 2025 looks like a year where more people will be able to achieve their homeownership goals. It's not a boom-and-bust prediction, but one of measured growth and a more accessible market for many.