Housing Market Predictions for Biggest Winners & Losers in 2025

What's going to happen to housing prices in 2025? Well, good news! Zillow recently updated their prediction for home prices in 2025, and they're expecting a small increase across the whole country. They think that home prices will go up about 2.9% between October 2024 and October 2025.

That's a little bit more than they thought before, which suggests that home prices might keep going up, but not as quickly as they have been. It's important to remember that this forecast is based on a bunch of different things, and housing prices can vary a lot from one part of the country to another.

In this blog post, I'm going to break down this housing market forecast in detail. I'll explain what's driving these predictions and show you which areas are expected to see the biggest and smallest price increases. I'll also share my own thoughts on what all of this means for people buying and selling homes in the next year. Let's dive in!

Understanding the Drivers of the Housing Market Forecast

The housing market is a complicated thing, affected by many different economic factors. Zillow's economists have figured out some of the most important things that are influencing their predictions about the future of housing.

• Low Inventory: Historically, the number of homes for sale has been quite low. This limited supply continues to be a crucial factor in supporting home values. When there aren't enough homes to meet buyer demand, prices tend to rise.
• Declining Mortgage Rates: The expectation of potentially lower mortgage rates is providing a boost to the market. As mortgage rates decrease, more people can afford to purchase a home, increasing demand and potentially pushing prices upward.
• Modest Improvements in Home Sales: Leading indicators of home sales are showing modest signs of improvement. This is another signal that the housing market might be gradually stabilizing and recovering from recent slowdowns.

However, there are some counterbalancing forces that are limiting how much home prices can appreciate:

• Increase in New Listings: While inventory remains historically low, we are starting to see a modest increase in the number of new homes being listed for sale. This increased supply could put downward pressure on home prices.
• High Mortgage Rates: Though mortgage rates are expected to decrease, they remain historically high compared to the past. This continues to make it challenging for some buyers to afford a home, hindering demand and price appreciation.

My Take: These opposing forces are creating a scenario where the housing market is experiencing a period of relative stability. We're not likely to see the dramatic price increases we experienced during the pandemic, but we're also unlikely to experience a significant downturn in the near future. The market seems to be finding a new equilibrium, with a slow and steady upward trend.

Housing Market Predictions: Biggest Winners and Losers in 2025

While the national forecast suggests a 2.9% increase in home prices, it's important to remember that the housing market is not uniform across the country. Some regions are projected to experience stronger price appreciation than others.

Regions With Strongest Home Price Appreciation:

Zillow anticipates the strongest home price appreciation between October 2024 and October 2025 in the following 10 markets:

Housing Market	Projected Price Appreciation
Atlantic City, NJ	+6.5%
Kingston, NY	+6.1%
Augusta, ME	+6.1%
Pottsville, PA	+5.9%
Knoxville, TN	+5.8%
Vineland, NJ	+5.7%
Lewiston, ME	+5.7%
Concord, NH	+5.6%
Bangor, ME	+5.3%
Muncie, IN	+5.3%

These markets are experiencing a combination of factors that are driving price growth, such as strong local economies, limited inventory, and growing population.

Regions With Strongest Home Price Declines:

On the other hand, Zillow forecasts the strongest home price drops in the following 10 markets:

Housing Market	Projected Price Appreciation
Lake Charles, LA	-7.8%
Houma, LA	-5.8%
Lafayette, LA	-4.0%
Johnstown, PA	-3.9%
New Orleans, LA	-3.8%
Eureka, CA	-3.4%
Beaumont, TX	-3.1%
Odessa, TX	-3.0%
Shreveport, LA	-2.9%
Hammond, LA	-2.9%

These markets are facing headwinds such as oversupply, economic challenges, and a decline in demand. It's important to note that several of these markets are located in Louisiana, which has been experiencing some economic difficulties in recent years.

These regional differences highlight the importance of focusing on local market conditions when making decisions about buying or selling a home. The national average doesn't necessarily reflect the specific circumstances in your area. It's always wise to consult with a local real estate professional to gain a deeper understanding of the market dynamics where you live.

Florida's Housing Market: A Case Study

Florida has been a hotbed of activity in the housing market in recent years, but the forecast for the coming year is a bit more uncertain. While Zillow anticipates that home prices will continue to rise, there are some concerning signs that the market might be cooling off.

• Increased Inventory: The state has seen a significant increase in the number of homes available for sale, which has led to a rise in the months of supply. This means that it's taking longer for homes to sell, which could put downward pressure on prices.
• Declining Condo Prices: Condo prices are currently declining in most Florida markets. This is a strong indicator that the market is starting to soften.
• Single-Family Home Price Declines: Some Southwest Florida markets, such as Punta Gorda and Cape Coral, are experiencing outright declines in single-family home prices. This further supports the notion that the market is losing some of its momentum.

My Take: Florida's housing market is facing a unique set of circumstances. The state's rapid growth in recent years has led to a surge in housing demand, but this demand might be starting to wane. The increase in inventory and the decline in condo prices are clear signs that the market is becoming more balanced. While I don't expect a major crash in Florida, it's likely that the rapid pace of price appreciation will slow down.

Existing Home Sales Forecast

In addition to the home price forecast, Zillow has also provided an outlook for existing home sales. They expect a gradual increase in sales in the coming year, with an estimated 4.3 million transactions in 2025. This would be a slight improvement over the 4.1 million recorded in 2023 and the projected 4 million in 2024.

This modest increase in sales is consistent with the overall forecast of a stable but slowly growing housing market. It suggests that while demand might not be surging, buyers are still interested in purchasing homes, leading to a slow but steady flow of transactions.

Implications for Homebuyers and Sellers

The housing market forecast has important implications for both homebuyers and sellers.

Homebuyers:

• Expect Moderate Price Growth: The forecast suggests that home prices will continue to rise, but at a moderate pace. This might provide a good opportunity for those looking to buy a home.
• Interest Rates are Key: Keep a close eye on interest rates. Lower mortgage rates could make buying a home more affordable.
• Be Prepared to Negotiate: The increased inventory and slower pace of price appreciation might give you more leverage during negotiations. You might be able to get a better deal than you would have a few years ago.

Home Sellers:

• Moderate Price Growth: While prices are still expected to rise, the pace of appreciation will be slower than in recent years. You might need to adjust your expectations.
• Competition is Less Intense: The increased inventory might mean that you'll face less competition from other sellers.
• Focus on Presentation: Given that the market is becoming more balanced, it's crucial to present your home in the best possible light. This can help it stand out from the competition.

Final Thoughts

The housing market forecast for 2025 suggests a period of relative stability and gradual growth. While we're unlikely to see a major boom or bust, home prices are expected to continue their upward trajectory, albeit at a slower pace. Regional variations will be significant, so it's important to consider local market conditions when making decisions about buying or selling a home.

I believe that the coming year presents a good opportunity for both buyers and sellers to participate in the market. Buyers can potentially find good deals in a less frenzied market, while sellers can still achieve a healthy return on their investment with a little bit of patience and a smart approach to marketing their homes.

As with any forecast, these predictions are subject to change. Unexpected economic events can impact the housing market, so it's important to stay informed about current conditions and consult with professionals in the field.