Is the housing market about to take a turn? The short answer is yes, but perhaps not the dramatic drop some were expecting. The National Association of Realtors (NAR) has adjusted its housing market forecast for 2025, now anticipating existing-home sales to reach 4.3 million, a 6% increase compared to 2024. While still positive, this is a step down from their previous, more optimistic projections.

For months, I've been closely watching the market, speaking with local agents, and analyzing trends. The initial excitement for a booming 2025 is now tempered with a dose of reality. Let's dive into what's causing this revision and what it could mean for you, whether you're a buyer, seller, or simply curious about the real estate world.

NAR Cuts 2025 Housing Market Forecast: Home Sales to Hit 4.3 Million

Why the Change of Heart at NAR?

Back in late 2024, NAR was pretty confident, forecasting existing-home sales to hit 4.9 million in 2025. So what happened? According to their updated NAR Real Estate Forecast Summit Update, several factors contributed to this shift.

• Strained Affordability: This is the big one. Home prices have remained stubbornly high, and while mortgage rates have fluctuated, they haven't dropped enough to significantly ease the burden on potential buyers.
• Price Growth Adjustments: NAR initially predicted a modest 2% home-price growth for both 2025 and 2026. Now, they've revised that upward to 3% and 4%, respectively. This means homes will likely be even less affordable than previously thought.
• Realistic Expectations: I believe part of the revision is simply a dose of realism. While the market has shown resilience, the factors that were expected to fuel a major boom haven't materialized as strongly as anticipated.

A Closer Look at the Revised Numbers

Here's a breakdown of NAR's revised forecasts:

• Existing-Home Sales (2025): 4.3 million (up 6% from 2024) – Previous forecast: 4.9 million
• New-Home Sales (2025): Up 10% – Previous forecast: Up 11%
• Existing-Home Sales (2026): Up 11% (remains within the previously projected range of 10%-15%)
• New-Home Sales (2026): Up 5% – Previous forecast: Up 8%
• Home-Price Growth (2025): 3% – Previous forecast: 2%
• Home-Price Growth (2026): 4% – Previous forecast: 2%

The biggest takeaway? While the market is still expected to grow, the pace of that growth is slowing down.

Is It All Doom and Gloom?

Not at all! Despite the downgraded forecast, NAR Chief Economist Lawrence Yun remains optimistic. He stated on the webinar that “The worst is over [for home sales]. The worst for inventory is over. I think the recession probability is still slim. Job additions, lower mortgage rates and all the factors driving home sales are moving positively, so look for more business opportunities this year.”

And honestly, I agree with his sentiment. The market has been through some rough patches, and the fact that it's still showing signs of growth is encouraging. Several positives are still at play:

• Job Market Stability: A strong job market provides confidence to potential homebuyers.
• Potential for Lower Mortgage Rates: While rates haven't plummeted, the expectation is that they will gradually decrease, making homes more accessible.
• Inventory Slowly Improving: While still below historical averages, housing inventory is slowly increasing in many markets, giving buyers more options.

How Does This Compare to Other Forecasts?

It's important to remember that NAR isn't the only organization making predictions. Their revised forecast of 4.3 million existing-home sales is actually more in line with other industry experts.

To put things in perspective:

• NAR (Revised): 4.3 million
• HousingWire (Mohtashami/Simonsen): 4.2 million
• Realtor.com: 4 million

This suggests that NAR's initial forecast was an outlier, and the revised numbers represent a more consensus view of the market.

What Does This Mean for Buyers?

If you're hoping for a dramatic price crash, this forecast suggests you might be waiting a while. While prices might not skyrocket, they're expected to continue their upward trend.

Here's my advice for buyers:

• Get Pre-Approved: Knowing how much you can afford is crucial.
• Be Realistic: Don't expect to find a bargain. Focus on finding a home that meets your needs within your budget.
• Consider Different Markets: Look at areas that might be slightly more affordable than your ideal location.
• Be Patient: The right home will come along, so don't feel pressured to jump into something you're not comfortable with.
• Do not time the market:*Time in the market is more important than timing the market.

What Does This Mean for Sellers?

While the market might not be as hot as it was a few years ago, it's still a good time to sell, especially if you've built up equity.

Here's my advice for sellers:

• Price Your Home Competitively: Don't overprice your home. Work with a real estate agent to determine a fair market value.
• Make Necessary Repairs: Ensure your home is in good condition to attract buyers.
• Stage Your Home: Make your home as appealing as possible to potential buyers.
• Highlight the Positives: Emphasize the unique features of your home and neighborhood.

My Personal Take

As someone deeply involved in real estate, I believe the revised forecast is a healthy dose of realism. The initial excitement for a massive boom was probably a bit overblown. The market is still moving in a positive direction, but it's doing so at a more sustainable pace.

I've seen firsthand how affordability challenges are impacting buyers. Many are priced out of their ideal markets, forcing them to make compromises or delay their home-buying dreams. This is why it's crucial to focus on solutions that address affordability, such as increasing housing supply and exploring alternative financing options.

Overall, I remain cautiously optimistic about the future of the housing market. While there are challenges ahead, the fundamentals remain strong. With a stable job market and the potential for lower mortgage rates, I believe the market will continue to grow, albeit at a more moderate pace.

Key Takeaways:

• NAR has downgraded its housing market forecast for 2025, now expecting existing-home sales to reach 4.3 million.
• The revision is primarily due to strained affordability and upward adjustments to home-price growth projections.
• Despite the downgrade, NAR remains optimistic about the market's overall trajectory.
• The revised forecast is more in line with other industry experts' predictions.
• Buyers should focus on affordability and be patient, while sellers should price their homes competitively.

Tables:

Forecast	Previous Estimate	Revised Estimate	Change
Existing Home Sales 2025	4.9 million	4.3 million	-0.6 million
New Home Sales 2025	Up 11%	Up 10%	-1%
Home Price Growth 2025	2%	3%	+1%
Home Price Growth 2026	2%	4%	+2%

Final Thoughts

The housing market is always changing. Stay informed, consult with trusted professionals, and make decisions that are right for your individual circumstances. Whether you're buying, selling, or simply keeping an eye on the market, understanding the trends is key to navigating this complex landscape.

Are you thinking about buying a home? Or maybe you're already a homeowner, keeping a close eye on the market? Either way, you've probably wondered if home prices are going to keep climbing, or if a dip is on the horizon. While most experts predict modest growth nationally in 2025, a recent CoreLogic report has identified five cities where home prices are predicted to crash within the next 12 months. The cities at the greatest risk of declining home prices are: Provo, UT; Tucson, AZ; Albuquerque, NM; Phoenix; and West Palm Beach, FL.

These cities are facing a greater than 70% probability of home price decline. Let's dive into why these particular areas are considered high-risk and what factors are contributing to this forecast.

5 Cities Where Home Prices Are Predicted To Crash

Why Should You Care About This Prediction?

Okay, so some expert somewhere thinks prices might go down in a few places. Why should you even care? Well, for a few reasons:

• If you're looking to buy: This information could help you decide where to focus your search or when to make an offer. Timing can be everything!
• If you already own a home: Knowing if your area is at risk can help you make informed decisions about refinancing, selling, or simply adjusting your financial expectations.
• Even if you're not in the market: Understanding these trends can give you a broader picture of the national housing market and the economic factors that influence it.

The CoreLogic Report: A Deep Dive

CoreLogic, a reputable real estate analytics firm, isn't just pulling these predictions out of thin air. Their Market Risk Indicator report takes into account a bunch of different factors, including:

• Economic Conditions: Things like job growth, unemployment rates, and overall economic stability in each area.
• Housing Supply: How many homes are on the market? Are there more buyers than sellers (a seller's market) or vice versa (a buyer's market)?
• Demand Dynamics: What's driving people to buy or rent in these areas? Are there factors that could cause demand to cool off?

By analyzing this data, CoreLogic assigns a probability of price decline to different metro areas. A 70% or greater probability, as seen in these five cities, is considered a high-risk scenario.

The Sun Belt Story: Boom and (Possible) Bust?

It's no accident that all five of these cities are in the Sun Belt. The Sun Belt saw huge price growth during the pandemic. People were moving to these areas for warmer weather, lower taxes, and more space. This boom pushed home prices way up. But, like all booms, this one might be running out of steam.

Here is a table view of the image attached in the prompt:

Risk Rank	Metropolitan Areas	Level of Risk of Price Decline	Confidence Score
1	Provo-Orem, UT	VERY HIGH ABOVE 70% PROBABILITY OF A PRICE DECLINE	50-75%
2	Tucson, AZ	VERY HIGH ABOVE 70% PROBABILITY OF A PRICE DECLINE	50-75%
3	Albuquerque, NM	VERY HIGH ABOVE 70% PROBABILITY OF A PRICE DECLINE	50-75%
4	Phoenix-Mesa-Scottsdale, AZ	VERY HIGH ABOVE 70% PROBABILITY OF A PRICE DECLINE	50-75%
5	West Palm Beach-Boca Raton-Delray Beach, FL	VERY HIGH ABOVE 70% PROBABILITY OF A PRICE DECLINE	50-75%

Here's why the Sun Belt might be cooling off:

• Higher Interest Rates: As the Federal Reserve has raised interest rates to combat inflation, mortgages have become more expensive. This makes it harder for people to afford homes, reducing demand.
• Increased Inventory: During the boom, builders were scrambling to keep up with demand. Now, there are more homes on the market in some Sun Belt cities, giving buyers more options and potentially driving prices down.
• Affordability Concerns: Even with potential price declines, some Sun Belt markets remain expensive relative to local incomes. This can deter potential buyers and slow down the market.

A Closer Look at the 5 Cities:

Let's take a closer look at each of the five cities identified by CoreLogic:

1. Provo-Orem, UT: This area saw significant price increases during the pandemic, but things are starting to shift. According to Realtor.com, the median list price in Provo last month was $566,375, down 1.4% from a year ago. Even so, it's still up a whopping 38% from January 2020. This suggests that the market may be correcting after a period of unsustainable growth. High growth leads to high declines!
2. Tucson, AZ: Tucson is another market that experienced rapid price appreciation. List prices in January were down almost 2% from the previous year.
3. Albuquerque, NM: This city has seen similar trends to Provo and Tucson. While still relatively affordable compared to other Sun Belt markets, Albuquerque's housing market is showing signs of slowing down. I have also noticed that in the desert regions like Albuquerque, the lack of rains can make it extremely difficult to do construction in time and within budget leading to inventory problems.
4. Phoenix-Mesa-Scottsdale, AZ: Phoenix was one of the hottest housing markets in the country during the pandemic. However, it's now facing a significant correction. Increased inventory and cooling demand are putting downward pressure on prices.
5. West Palm Beach-Boca Raton-Delray Beach, FL: South Florida saw a huge influx of people during the pandemic, driving up prices. But the area is also vulnerable to rising insurance costs and other factors that could dampen demand. List prices were down a notable 10% from a year earlier in Palm Beach County, indicating a significant shift in the market.

National Trends vs. Local Realities:

While these five cities are considered high-risk, it's important to remember that the national housing market is expected to see modest growth overall. CoreLogic projects that national home prices will increase by 4.1% annually through December 2025. Realtor.com is projecting similar growth of about 3.7% through 2025.

• Why the difference? The housing market is hyperlocal. What's happening in one city or region might be completely different from what's happening elsewhere.
• Mortgage Rates are Key: High mortgage rates are still a major factor weighing on the market. As long as rates remain elevated, buyer demand will likely remain subdued.
• Inventory Levels Matter: The amount of homes for sale will also play a big role. If inventory continues to increase, prices could face downward pressure.

What Does This Mean for You?

So, you've read all this information – now what do you do with it? Here are some things to consider, depending on your situation:

• Potential Buyers: If you're looking to buy in one of these five cities, now might be a good time to start shopping around. You might have more negotiating power as prices potentially decline. But, don't try to time the market perfectly. Instead, focus on finding a home that meets your needs and fits your budget.
• Current Homeowners: If you own a home in one of these areas, don't panic! A price decline doesn't necessarily mean you'll lose money. Focus on the long term. If you're planning to sell in the near future, it might be worth considering listing your home sooner rather than later. However, the real estate market is very difficult to predict.
• Everyone Else: Even if you're not directly affected by these trends, it's good to stay informed about the broader housing market. This knowledge can help you make better financial decisions in the future.

The Role of Economic Experts

Experts like Selma Hepp, Chief Economist at CoreLogic, play a vital role in helping us understand the housing market. Hepp points out that the market has been “bifurcated,” with Northeastern markets seeing price growth due to low inventory, while Southern markets are adjusting to higher inventory and rising costs.

Other economists, like Thomas Ryan of Capital Economics, believe that mortgage rates will likely remain near 7% this year before potentially declining in 2026. This suggests that the housing market will continue to be influenced by interest rate pressures in the near term.

The Future Outlook

While the CoreLogic report highlights the risk of price declines in certain cities, the overall outlook for the national housing market is still relatively positive. Most experts believe that home prices will continue to grow, albeit at a slower pace than in recent years.

Here are some key factors to watch:

• Mortgage Rates: Any significant changes in mortgage rates will have a major impact on the market.
• Inflation: How effectively the Federal Reserve combats inflation will influence interest rates and overall economic conditions.
• Housing Supply: The level of new construction and existing homes for sale will determine how much competition buyers face.

Final Thoughts: Be Informed, Be Prepared

The housing market is always changing. There are ups and downs, booms and busts. The key is to stay informed, understand the trends, and make decisions that are right for you.

Whether you're buying, selling, or just watching from the sidelines, I hope this article has given you a better understanding of the factors that influence home prices and the potential risks and opportunities that lie ahead.

Want to know where houses are flying off the shelves? The top 5 markets where homes are selling the fastest are primarily clustered along the coasts, specifically in California, and on the East Coast. If you're looking to buy or sell in a market that's moving quickly, keep reading to find out which cities are seeing homes snapped up in record time.

Top 5 Housing Markets Where Homes Are Selling at Record Pace in 2025

The Spring Market is Heating Up!

As someone who has been watching the real estate market closely for years, I can tell you that spring is typically a busy season. But in some areas, it's more like a frenzy! We're seeing buyers eager to jump into the market, and that's creating some intensely competitive conditions. I always advise my clients to be prepared to move quickly if they find a property they love, especially in these hot markets.

What Makes a Market Move So Fast?

Several factors contribute to the speed at which homes sell in a particular area. These include:

• Strong local economies: Areas with thriving job markets tend to attract more buyers.
• Limited inventory: When there are fewer homes for sale than buyers wanting to buy, demand increases, and homes sell faster.
• Desirable locations: Coastal cities, those with good schools, and those with plenty of amenities are always in high demand.
• Competitive interest rates: Although, interest rates have risen sharply, but as compared to past rates, these are still better and hence demand is still high.

Now, let’s dive into the specific markets where homes are being snapped up faster than you can say “mortgage approval”.

The Top 5 Fastest-Moving Housing Markets

According to the latest data from Realtor.com, these are the top 5 markets where homes are selling the fastest as of February 2025:

1. San Jose, CA
2. San Francisco, CA
3. Boston, MA
4. Washington, DC
5. San Diego, CA

Let's take a closer look at each of these markets:

1. San Jose, CA: Silicon Valley Speed

• Median Days on the Market: 22 days
• Median Home List Price: $1.3 million

San Jose, the heart of Silicon Valley, takes the top spot. It's no surprise, really. The tech industry drives a lot of demand here, and people with high-paying jobs are eager to invest in real estate. Although the median price is eye-watering, homes are barely on the market before they're sold. If you're selling in San Jose, you need to be ready for multiple offers and a quick closing.

2. San Francisco, CA: Bay Area Boom

• Median Days on the Market: 30 days
• Median Home List Price: $899,944

San Francisco is another Silicon Valley hub where real estate moves at warp speed. While the median list price is slightly lower than San Jose, it’s still a very expensive market. As per reports, the median list price is also down by 9% compared to the previous year. The demand here is driven by the same factors as San Jose: a strong tech industry and a limited supply of homes.

3. Boston, MA: East Coast Excellence

• Median Days on the Market: 33 days
• Median Home List Price: $839,450

Crossing over to the East Coast, we find Boston in the number three spot. This historic city boasts a strong economy, excellent universities, and a vibrant cultural scene, all of which make it a desirable place to live. As per reports, the East Coast markets have not yet recovered to pre-pandemic levels, which keeps the market pace snappy. Although the price is relatively high, homes are selling quickly.

4. Washington, DC: A Capital Market

• Median Days on the Market: 34 days
• Median Home List Price: $579,995

The nation's capital comes in fourth. Washington, DC, is a stable market with a large government workforce. It will be interesting to see how the surge in for-sale inventory in DC plays out in the coming months, considering its large share of federal workers.

5. San Diego, CA: Sun, Sand, and Swift Sales

• Median Days on the Market: 34 days
• Median Home List Price: $949,995

Rounding out the top five is San Diego, another highly desirable California city. With its beautiful beaches, sunny weather, and strong economy, it's no wonder homes are selling quickly here. Although the price is down 4.7% year over year, demand remains high.

Why Are Coastal Markets So Hot?

It's clear that coastal markets are dominating the list. What's driving this trend? Here are a few key factors:

• Job Opportunities: Major cities on both coasts are home to booming tech and finance industries, attracting high-earning professionals.
• Lifestyle: Many people are drawn to the coastal lifestyle, with its access to beaches, outdoor activities, and cultural attractions.
• Limited Space: Coastal cities often have limited space for new construction, leading to a shortage of housing and increased competition.
• Investment Potential: Real estate in these areas is often seen as a solid investment, attracting both domestic and international buyers.

What Does This Mean for Buyers and Sellers?

If you're thinking about buying or selling in one of these hot markets, here's what you need to know:

For Buyers:

• Get Pre-Approved: Having a pre-approval letter in hand shows sellers that you're a serious buyer.
• Be Prepared to Move Quickly: Homes are selling fast, so you need to be ready to make an offer as soon as you find a property you like.
• Consider Making a Strong Offer: In a competitive market, you may need to offer above the asking price to stand out from the crowd.
• Don't Waive Important Contingencies Lightly: While it can be tempting to waive contingencies like inspections to make your offer more attractive, be very careful.

For Sellers:

• Price Your Home Strategically: Work with a real estate agent to determine the optimal price for your home based on current market conditions.
• Make Your Home Show Ready: First impressions matter. Make sure your home is clean, well-maintained, and attractively staged.
• Be Prepared for Multiple Offers: In a hot market, it's not uncommon to receive multiple offers.
• Consider All Offers Carefully: Don't just focus on the highest price. Also, consider the terms of each offer, such as contingencies and closing dates.

Looking Ahead

The real estate market is constantly changing, and it's difficult to predict exactly what the future holds. However, based on current trends, it's likely that these top 5 markets where homes are selling the fastest will continue to be competitive for the foreseeable future. Of course, economic conditions and other factors could always influence the market, so it's important to stay informed and work with a knowledgeable real estate professional.

I’ve found that staying on top of these trends and understanding the local nuances is crucial to providing my clients with the best possible advice. Whether you're buying or selling, having a real estate agent who understands the local market can make all the difference.

Are you dreaming of owning a home but feeling like it's financially out of reach? Well, the good news is that more homes are becoming available, creating opportunities for buyers like you! The number of homes flooding onto the market grows, and the best part? There are still some amazing places where you can snag a house for under $500,000. Here, we're diving into the top 10 least expensive metros in the U.S. where you can find affordable housing.

Top 10 Least Expensive Places to Buy a House in 2025

Let's face it, the housing market has been a wild ride lately. For the past couple of years, it felt like prices were soaring, and inventory was shrinking. But the tides are turning! According to a recent Realtor.com report, new listings are up a whopping 27.6% year-over-year. We've seen an increase in the number of homes for sale compared to the previous year for 70 weeks straight as of March 8, 2025. What does this mean for you? More choices, less competition, and potentially better deals!

Why is This Happening?

The increase in inventory is partly due to a shift in buyer behavior. With higher mortgage rates, some buyers are taking a step back, giving others a chance to enter the market. As Hannah Jones, a senior economic research analyst at Realtor.com, rightly pointed out, buyers can now afford to be more selective, which puts pressure on sellers to price their homes competitively. This is fantastic news if you're looking to buy!

And guess what? Sellers are starting to respond. New listings jumped 8.3% year-over-year, showing that sellers are gaining confidence in listing their homes, even with the fluctuating mortgage rates. Typically, we see new listings peak during the spring and summer months, so this trend might continue.

Where Can You Find These Bargains?

Realtor.com identified the top 10 least expensive metros among the 50 largest in the U.S. Interestingly, none of them are located in the West. Instead, we see a mix of cities in the South, Northeast, and Midwest.

Here's the breakdown:

• South: 2 metros
• Northeast: 2 metros
• Midwest: 6 metros

This regional distribution suggests that affordability varies greatly across the country, and you might need to broaden your search beyond the usual hotspots to find your dream home without breaking the bank.

The Top 10 Least Expensive Metros: Your Ticket to Affordable Homeownership

So, where exactly can you find these affordable homes? Let's dive into the top 10 least expensive metros, one by one. I've added a bit of my own perspective and insights to help you get a better feel for each city.

1. Pittsburgh, PAPittsburgh is consistently ranked as one of the most affordable cities in the U.S., and for good reason. I've always felt that it offers a great balance of urban amenities and small-town charm. With a growing job market, especially in the tech and healthcare sectors, it's a great place for young professionals and families alike. Plus, who can resist rooting for the Steelers, Penguins, or Pirates?
   • Median list price: $229,000
   • Number of listings below $300,000: 424
   • Number of listings between $350,000–$500,000: 997
2. Detroit, MIDetroit has been making a remarkable comeback in recent years, and its housing market reflects that. While still facing challenges, the city's revitalization efforts are paying off, attracting new businesses and residents. As the birthplace of Motown, Detroit has a rich cultural heritage, and its diverse neighborhoods offer something for everyone.
   • Median list price: $239,900
   • Number of listings below $300,000: 1,670
   • Number of listings between $350,000–$500,000: 1,979
3. Cleveland, OHCleveland has faced its share of economic struggles, but its resilient spirit and affordability make it an attractive option for homebuyers. Situated on the shores of Lake Erie, it offers a variety of outdoor activities, and its cultural scene is surprisingly vibrant. Plus, the Cleveland Clinic is a world-renowned medical center, making it a hub for healthcare professionals.
   • Median list price: $241,725
   • Number of listings below $300,000: 455
   • Number of listings between $350,000–$500,000: 599
4. Buffalo, NYKnown for its friendly residents and proximity to both Canada and Niagara Falls, Buffalo is a city with a lot to offer. Its affordability and strong sense of community make it a popular choice for families. And let's not forget, it's the birthplace of the Buffalo wing!
   • Median list price: $249,974
   • Number of listings below $300,000: 180
   • Number of listings between $350,000–$500,000: 320
5. St. Louis, MOSt. Louis is quickly becoming a hub for startups and tech companies, making it an attractive option for young professionals. But it's not just about work; the city also boasts beautiful parks, a world-famous zoo, and a thriving craft beer scene.
   • Median list price: $276,799
   • Number of listings below $300,000: 814
   • Number of listings between $350,000–$500,000: 1,234
6. Birmingham, ALBirmingham offers a unique blend of Southern charm and urban amenities. It's a family-friendly city with a thriving music scene and ample green spaces. Plus, its healthcare system is top-notch.
   • Median list price: $285,000
   • Number of listings below $300,000: 535
   • Number of listings between $350,000–$500,000: 825
7. Indianapolis, INIndianapolis, often called the “Crossroads of America,” is a bustling city with a diverse economy and a strong job market. From sports to culture, there's always something to do in Indy.
   • Median list price: $300,000
   • Number of listings below $300,000: 552
   • Number of listings between $350,000–$500,000: 1,551
8. Louisville, KYLouisville, home of the Kentucky Derby, is a city with a rich history and a unique culture. Known for its bourbon distilleries and Southern hospitality, it offers a relaxed and welcoming atmosphere.
   • Median list price: $309,950
   • Number of listings below $300,000: 356
   • Number of listings between $350,000–$500,000: 919
9. Oklahoma City, OKOklahoma City has transformed itself in recent years, becoming a vibrant and growing metropolis. With a thriving job market, quick commutes, and a great quality of life, it's a city on the rise.
   • Median list price: $314,992
   • Number of listings below $300,000: 381
   • Number of listings between $350,000–$500,000: 1,237
10. Cincinnati, OHCincinnati offers a lively sports scene, numerous attractions, and plenty of green spaces. Its central location in the Midwest makes it a great base for exploring other cities in the region.
    • Median list price: $324,950
    • Number of listings below $300,000: 169
    • Number of listings between $350,000–$500,000: 556

What Does This Mean For You?

The increase in housing inventory and the availability of affordable options in these metros present a fantastic opportunity for potential homebuyers. If you've been feeling priced out of the market, it's time to start exploring these cities and see if one of them could be your new home.

Remember to do your research, talk to local real estate agents, and get pre-approved for a mortgage. With a little planning and effort, you can make your dream of homeownership a reality!

The housing market is always on my mind, and I'm sure it's on yours too, especially if you're thinking of buying, selling, or just keeping an eye on your investment. Here's the bottom line: Fannie Mae has dialed back its expectations for the housing market in 2025, predicting fewer home sales and slower price growth than previously anticipated. This change is primarily due to persistent high mortgage rates, which continue to be a major hurdle for potential buyers.

Fannie Mae Lowers Housing Market Forecast for 2025: What This Means for You

Why the Change in Forecast? The Devil's in the Details

Okay, so Fannie Mae adjusted its forecast. But what's really going on here? It all boils down to a few key factors that are intertwined:

• Mortgage Rates Staying Higher for Longer: This is the big one. While everyone hoped rates would drop significantly, the economy has been surprisingly resilient. This “stickiness” in inflation means the Federal Reserve might not cut rates as aggressively as once thought. Fannie Mae now expects the 30-year mortgage rate to hover around 6.5% at the end of 2025 and 6.3% in 2026. That's a significant jump from their previous predictions.
• Affordability Woes: Even if you're earning a decent salary, affording a home can feel impossible with these rates. High prices and borrowing costs make it tough for first-time buyers and those with limited savings.
• The “Lock-In” Effect: Many current homeowners are sitting pretty with mortgage rates well below 4% or even 3%. Why would they sell and take on a new mortgage at double the rate? This keeps existing homes off the market, further squeezing supply and impacting sales.

Diving Deeper: What the Numbers Say

Let's get specific about the revisions Fannie Mae has made. This gives us a clearer picture of what to expect:

• Home Sales: They've reduced their forecast for total home sales to 4.89 million in 2025 (previously 5.00 million) and 5.25 million in 2026 (previously 5.47 million). These are significant downgrades, suggesting a slower pace of activity than initially hoped.
• Home Price Growth: While prices aren't expected to crash, the rate of increase is slowing down. Fannie Mae projects home price growth of 5.8% in 2024, 3.5% in 2025, and just 1.7% in 2026 (on a Q4/Q4 basis). That’s a considerable deceleration.
• Mortgage Originations: With fewer sales and slower price growth, mortgage lenders will also see less business. Fannie Mae now forecasts single-family mortgage originations of $1.92 trillion in 2025 (previously $1.97 trillion) and $2.27 trillion in 2026 (previously $2.37 trillion).

To summarize all the information in numbers, let's take a look at the table below:

Metric	Previous Forecast (December)	Revised Forecast (January)
2025 Total Home Sales	5.00 million	4.89 million
2026 Total Home Sales	5.47 million	5.25 million
2025 Mortgage Rate (Year-End)	6.3%	6.5%
2026 Mortgage Rate (Year-End)	5.9%	6.3%
2025 Mortgage Originations	$1.97 trillion	$1.92 trillion
2026 Mortgage Originations	$2.37 trillion	$2.27 trillion
2025 Home Price Growth (Q4/Q4)	3.6%	3.5%

The Broader Economic Picture: GDP and Inflation

It's not just about housing. The overall health of the economy plays a vital role. Fannie Mae also updated their economic forecasts, here's the summary:

• GDP Growth: They expect 2.2% GDP growth in 2025 and 2.0% in 2026. These figures are pretty much unchanged, showing that the economy is expected to keep growing at a moderate pace.
• Inflation: Here's where things get a bit more interesting. They've increased their inflation expectations for 2025, mainly due to higher energy prices. Core inflation, however, is still expected to gradually decrease through 2026. This suggests that while some prices might rise, overall inflation pressures should ease over time.

Regional Differences: Not All Markets Are Created Equal

It's crucial to remember that the housing market is not a monolith. What's happening in one city or state can be very different from another. Fannie Mae highlights some key regional trends:

• Sun Belt vs. Northeast/Midwest: The Sun Belt, which has seen a lot of new construction, has more homes for sale compared to the Northeast and Midwest, where inventory remains tight. This means the Sun Belt is likely to see more sales but slower price appreciation, while the Northeast and Midwest may see less sales activity but relatively stable prices.
• Inventory Levels: An increase in homes for sale usually indicates a cooling market. However, Fannie Mae notes that the rise in inventory isn't necessarily due to more listings but rather to homes taking longer to sell. This suggests a shrinking pool of buyers in some areas.

The Impact on Different Players in the Market

This revised forecast affects everyone involved in the housing market, directly or indirectly:

• Homebuyers: The higher mortgage rates make buying a home more expensive and challenging. Patience and careful financial planning are more important than ever. Focus on improving your credit score, saving for a larger down payment, and exploring different loan options.
• Sellers: If you're planning to sell, be realistic about pricing your home. The days of bidding wars and sky-high offers may be over, at least for now. Work with a real estate agent who understands the local market and can help you price your home competitively.
• Homebuilders: Higher rates and slower sales can put pressure on homebuilders. Expect to see more incentives and concessions offered to attract buyers. This could be a good opportunity to negotiate a better deal on a new home.
• Investors: Real estate investors need to be cautious and do their homework. Focus on markets with strong fundamentals and long-term growth potential. Rental properties may become more attractive as affordability challenges keep people from buying.

My Two Cents: What I Think This Housing Forecast Means

I've been watching the housing market for a while now, and here's my take on this situation. While the revised forecast isn't exactly cheerful, it's also not a reason to panic. I don't expect a market crash like we saw in 2008. Instead, I think we're heading towards a period of moderation and stabilization.

The biggest challenge, in my opinion, is affordability. Until mortgage rates come down significantly or incomes rise substantially, many people will struggle to buy a home. This will likely keep a lid on sales volume and price growth.

However, I also believe there are opportunities to be found. For buyers, a slower market means less competition and more time to shop around. You might even be able to negotiate a better price or terms. For sellers, it's important to be realistic and adapt to the changing market dynamics. Focus on presenting your home in the best possible light and working with a skilled agent.

What to Watch Out For in the Coming Months

The housing market is constantly evolving, so it's important to stay informed. Here are a few things I'll be keeping an eye on:

• Inflation Data: Inflation is the key to the Fed's interest rate decisions. If inflation continues to cool down, we could see mortgage rates start to decline.
• Economic Growth: A strong economy is generally good for the housing market, but it could also keep inflation higher for longer.
• Housing Inventory: Keep an eye on the number of homes for sale in your local market. A growing inventory could put downward pressure on prices.
• Consumer Confidence: Consumer sentiment can influence housing demand. If people are feeling optimistic about the future, they're more likely to buy a home.

Final Thoughts

The Fannie Mae lowers housing market forecast for 2025 reflects the challenges posed by persistent high mortgage rates. While the outlook isn't as rosy as previously hoped, it doesn't signal a market collapse. By staying informed, being realistic, and seeking expert advice, you can navigate the housing market successfully, whether you're buying, selling, or investing.

Are you thinking about buying or selling a home? Or maybe you're just curious about what's happening in the real estate world? Well, let's dive into what the housing market trends in 2025 are shaping up to be. Based on the latest data, the market is showing signs of cooling down, offering a bigger selection of homes for buyers and more price negotiation opportunities. However, the affordability issue continues to persist.

Is a Big Housing Market Shift Underway in 2025?

For a long time, it felt like sellers had all the power. But the tide seems to be turning, ever so slightly. One of the biggest shifts I'm seeing is an increase in the number of homes being listed for sale. According to a recent Redfin report, new listings rose by 7.9% compared to last year. That's the biggest jump we've seen in quite a while!

What does this mean for you? More options! Think of it like walking into a store with a fully stocked shelf, instead of just a few items to choose from. This boost in active listings is giving buyers more power to be selective.

Demand is Cooling Off: A Sigh of Relief for Some

While new listings are up, buyer demand has been a bit sluggish. Pending sales are down 8.1% compared to last year. Even though there's been a small uptick from last month, it's still not a huge surge. This slowdown in demand is important because it gives buyers more breathing room. You're less likely to find yourself in a crazy bidding war, which can be stressful and push prices up unnecessarily.

The Redfin Homebuyer Demand Index, which measures how many people are touring homes and using other Redfin services, is also hovering near its lowest level since last spring. This tells me that people are being more cautious and taking their time before making a move.

More Supply, Less Pressure: Homes Selling for Under Asking Price

The combination of more homes on the market and less frantic buying activity is having an impact on prices. We're starting to see homes sell for under their original asking price. In fact, the typical home is selling for about 2% less than what the seller initially wanted. This is the biggest discount we've seen in about two years.

This doesn't mean that home prices are crashing. It just means that the days of automatically getting above asking price are likely over, at least for now. Buyers have more leverage to negotiate and potentially get a better deal.

The Affordability Challenge: Still a Major Hurdle

Even with homes selling for a bit less, affordability remains a huge issue. High home prices and mortgage rates are still making it tough for many people to become homeowners. The median monthly housing payment is sitting at around $2,784, which is up 8.3% from last year and just a stone's throw away from the all-time high.

While daily average mortgage rates did dip below 7% recently, that's still considerably higher than what we've seen in the past few years. These higher rates can add hundreds of dollars to your monthly payment, making it harder to qualify for a mortgage and putting a strain on your budget.

Why Are Buyers Hesitating?

There are a few reasons why buyers are being more cautious:

• High Costs: As I mentioned, home prices and mortgage rates are still a major concern. People are hesitant to stretch their finances too thin.
• Economic Uncertainty: There's still some uncertainty about the economy, with ongoing discussions about interest rates, inflation, and potential policy changes. Some buyers are waiting to see how things play out before making a big purchase.
• Winter Weather: Let's not forget the weather! Snow and cold temperatures in many parts of the country kept some house hunters indoors during January.

Expert Insights and Regional Variations

Joe Paolazzi, a Redfin Premier agent in Pittsburgh, points out that some homeowners were holding off listing their homes, waiting for mortgage rates to drop or market conditions to improve. Now that rates have declined somewhat, they are jumping into the market.

“Sellers are also noticing that even though there are fewer buyers in the market than usual, the buyers who are on the hunt are serious and willing to pay a fair price,” he says. He even notes that bidding wars are still happening in desirable neighborhoods and for investment properties.

It's important to remember that the housing market is not a one-size-fits-all situation. What's happening in one city might be very different from what's happening in another. Let's take a look at some regional trends:

• Price Increases: Pittsburgh saw a whopping 15.7% increase in median sale price year-over-year. Other areas with significant increases include New Brunswick, NJ, Newark, NJ, Nassau County, NY, and Fort Lauderdale, FL.
• Price Decreases: On the other hand, Austin, TX, saw a 5.5% decrease in median sale price. Other areas with declines include Tampa, FL, San Francisco, Jacksonville, FL, and Atlanta.
• Pending Sales: Portland, OR, experienced a 7.1% increase in pending sales, while Miami saw a dramatic 21.6% decrease.
• New Listings: Orlando, FL, had a huge surge in new listings (27.7%), while Detroit saw a decline (13.9%).

Key Housing Market Data (Four Weeks Ending Feb. 2, 2025)

To give you a clearer picture, here's a table summarizing some key data points:

Metric	Value	Year-over-Year Change	Notes
Median Sale Price	$376,750	4.6%
Median Asking Price	$412,157	5.7%
Median Monthly Mortgage Payment	$2,784	8.3%	At a 6.95% mortgage rate; $21 shy of April's all-time high
Pending Sales	65,603	-8.1%
New Listings	76,194	7.9%	Biggest increase in 5 weeks
Active Listings	897,798	12.5%	Smallest increase in nearly a year
Months of Supply	5	+0.6 pts.	Longest span since Feb. 2019, except the prior 4-week period
Share of Homes Off Market in 2 Weeks	29%	Down from 32%
Median Days on Market	55	+6 days	Longest span in nearly 5 years
Share of Homes Sold Above List Price	20.7%	Down from 22%
Average Sale-to-List Price Ratio	98%	Down from 98.1%

What Does This Mean for Buyers?

If you're a buyer, this shift in the market could be good news. Here's what I recommend:

• Take Your Time: Don't feel rushed. With more inventory, you have the luxury of being patient and finding the right home for you.
• Shop Around for Mortgage Rates: Get quotes from multiple lenders to find the best interest rate possible. Even a small difference in rate can save you thousands of dollars over the life of the loan.
• Negotiate: Don't be afraid to make an offer below the asking price, especially if the home has been on the market for a while.
• Consider Your Long-Term Needs: Think about your future plans. How long do you plan to stay in the home? What are your priorities in terms of location, size, and amenities?

What Does This Mean for Sellers?

If you're a seller, you might need to adjust your expectations. Here's my advice:

• Price Your Home Competitively: Work with your real estate agent to determine a realistic asking price based on current market conditions in your area.
• Make Necessary Repairs and Improvements: Make sure your home is in good condition and shows well. Fix any obvious problems and consider making some cosmetic upgrades to make it more appealing to buyers.
• Be Patient: It might take longer to sell your home than it would have a year or two ago. Be prepared to wait for the right offer.
• Consider Offering Incentives: To attract buyers, you could offer incentives like paying for some of the closing costs or including appliances in the sale.

My Final Thoughts: Cautious Optimism

The housing market in 2025 is certainly in a state of flux. While affordability challenges persist, the increase in inventory and the slight cooling of demand could offer some relief to buyers. It's a market that requires careful planning, realistic expectations, and a good understanding of local conditions. I think we will see some positive changes in the later half of the year, but, it’s too early to be assertive.

Remember, the best approach is to stay informed, work with experienced professionals, and make decisions that are right for your individual circumstances.

Dreaming of owning a home? It's a big goal, and one of the first questions that pops into your head is probably, “How much do I need to save for a down payment?” Well, according to recent data, across the U.S., the typical down payment for homebuyers is now 16% of the home’s price. Yes, you read that right – 16%.

That's up from 15% just a year ago, according to a Redfin analysis of county records from 40 of the most populated metro areas in the U.S. (December 2024 data). In real money terms, we're talking about a median down payment of roughly $63,000. That’s a significant chunk of change, and it's important to understand why this number is what it is, and what it means for you if you’re thinking about buying a home.

Housing Market: The Typical Buyer’s Down Payment Is 16% of the Home’s Price

So, why are homebuyers typically putting down 16% right now? The simplest answer, and frankly, the biggest reason, is that home prices have gone up. Think about it like this: if you're buying something more expensive, even if you put down the same percentage, the actual dollar amount you need is going to be higher. And that’s exactly what’s happening in the housing market.

According to the Redfin report, the median U.S. home sale price increased by 6.3% year-over-year in December 2024, reaching around $428,000. That’s a big jump! So, even if buyers were still aiming for that 15% down payment from last year, the higher prices automatically mean a larger down payment in dollars.

In fact, the typical down payment in dollar terms has gone up by 7.5% compared to the previous year, which is the biggest increase we’ve seen in five months. That $63,188 figure really puts things into perspective – it’s about $4,000 more than what homebuyers were putting down just a year prior.

Think about it from my perspective, having watched the market for years. I've seen firsthand how quickly home prices can change. It’s not just about wanting a bigger house; often, it's simply about keeping pace with the market. As homes become more expensive, the down payment naturally follows suit.

Mortgage Rates: Another Piece of the Puzzle

Rising home prices aren’t the only factor at play. Another major reason why down payment percentages are a bit elevated right now is mortgage rates. We’ve seen rates climb up to around 7% recently, which is significantly higher than what we were used to just a few years ago.

When mortgage rates are high, it makes borrowing money more expensive. This can impact homebuyers in a couple of ways regarding down payments:

• Reducing Monthly Payments: Some buyers are choosing to put down a larger down payment intentionally. Why? To reduce the amount they need to borrow and, in turn, lower their monthly mortgage payments. A bigger down payment means a smaller loan, and a smaller loan means less interest paid over time. In a high-rate environment, this can be a smart strategy to make housing more affordable month-to-month.
• Making Offers More Attractive: While the market isn't as crazy competitive as it was during the peak pandemic buying frenzy, in some areas, a larger down payment can still make your offer look stronger to a seller. It signals that you're a serious buyer with solid financial footing.

From my experience, I've noticed buyers becoming much more strategic with their finances lately. They're running the numbers, looking at different down payment scenarios, and trying to find the sweet spot where they can afford the upfront costs while also managing their monthly payments comfortably. It's a balancing act, and current mortgage rates definitely add another layer of complexity.

Remember the Pandemic Days? Down Payments Then vs. Now

It’s interesting to remember how wildly down payments swung during the pandemic. Before all that craziness, the median down payment was usually around 10%. Then, during the height of the pandemic buying frenzy in 2021, it jumped up to the 15% range. Mortgage rates were also a factor back then, but in a totally different way.

Back then, rates were incredibly low, sometimes even under 3%. This fueled intense bidding wars. To stand out from the crowd and win a home, many buyers started putting down larger down payments. It wasn't necessarily about affordability in the long run; it was more about making their offer the most appealing to sellers in a super competitive market.

Things have changed quite a bit since then. As Sheharyar Bokhari, a senior economist at Redfin, points out, “While a larger down payment can lower monthly mortgage payments and help strengthen an offer in a bidding war, bigger isn’t always better.” He’s right. The housing market in many parts of the country is now leaning more in favor of buyers. This means you, as a buyer, have more negotiating power. You don't necessarily have to empty your savings for a huge down payment to get your offer accepted. It’s becoming more about making smart financial decisions for your situation. Maybe saving some of that money for home renovations or other investments makes more sense right now. It’s all about finding what works best for your long-term financial goals.

Cash is Still King, But Less Dominant

Let’s talk about cash buyers. For a long time, cash was the ultimate power move in the housing market. And while cash purchases are still significant, they're actually becoming less common. According to the Redfin data, about 31% of homes were bought with all cash in December 2024. That’s down from 34% the year before. It might seem like a small drop, but it's a noticeable trend.

Why were cash purchases so popular in the first place, and why are they declining now?

• High Mortgage Rates Drove Cash Purchases: The share of cash buyers actually peaked in 2023. That’s because mortgage rates were at their highest then, hitting nearly 8%, a level we hadn’t seen in two decades. When rates are that high, buyers who can afford to pay in cash are much more likely to do so. Why pay all that interest if you don't have to? It's a way to avoid those hefty monthly payments and save a lot of money on interest over the life of the loan.
• Rates Have Come Down, and So Have Cash Purchases: Since then, mortgage rates have come down a bit and stabilized in the 6-7% range. This slight decrease has made borrowing money a little less painful, and as a result, we're seeing fewer all-cash purchases. Also, investors, who often make up a large portion of cash buyers, have been purchasing fewer homes recently, further contributing to the decline in cash sales.

Looking at the bigger picture, about 32.6% of home sales in 2024 were all-cash, which is the lowest share in the past three years. While cash is still a significant factor, it's clearly not as dominant as it was when mortgage rates were at their peak.

FHA and VA Loans: Helping Buyers Get In the Door

For many homebuyers, especially first-timers or those with moderate incomes, government-backed loans like FHA and VA loans are crucial for making homeownership a reality. Let’s take a look at how these are being used right now.

• FHA Loans: About 15% of mortgaged home sales in December 2024 used an FHA loan. This is slightly down from 15.9% the previous year, but up from a decade-low of around 10% in mid-2022. FHA loans are insured by the Federal Housing Administration and are designed for low-to-moderate-income borrowers. They are especially popular with first-time homebuyers because they have more flexible financial requirements than conventional loans, often requiring a down payment as low as 3.5%.
• VA Loans: The use of VA loans is slightly increasing. In December, about 6.7% of mortgaged home sales used a VA loan, up from 6.2% the year before. VA loans are guaranteed by the Department of Veterans Affairs and are available to veterans, active-duty military personnel, and surviving spouses. One of the biggest advantages of VA loans is that they often require little to no down payment.

Why are we seeing these trends with FHA and VA loans?

• Market Shift Favors FHA Loans: Back in late 2021 and early 2022, when the market was hyper-competitive, buyers using FHA loans sometimes found it harder to get their offers accepted because sellers often preferred buyers with larger down payments and stronger financial profiles. Now that the market is more balanced, sellers are more open to offers using FHA loans.
• Affordability Challenges: With home prices still high, even though they might not be skyrocketing like before, many buyers are finding it challenging to save up for large down payments. This makes FHA loans, with their lower down payment requirements, a more attractive and accessible option for many.

Conventional Loans Still Reign Supreme

Despite the rise in FHA and VA loan usage for some buyers, conventional loans remain the most common type of mortgage. In December 2024, nearly four out of five borrowers (78.4%) used a conventional loan. This is pretty much unchanged from the 77.9% the year before. Conventional loans are mortgages that are not backed by the government, and they typically have stricter requirements for credit scores and down payments. However, for buyers who qualify, they often offer competitive interest rates and terms.

Metro-Level Deep Dive: Where Down Payments Vary Wildly

Nationwide averages are helpful, but the housing market is incredibly local. Down payment trends can vary significantly from one city to another. Let's zoom in on some of the metro-level data from the Redfin report to see what’s happening in different parts of the country. Remember, this data is from December 2024 and covers 40 of the most populous U.S. metros.

Down Payment Percentages: The High and Low Ends

• Highest Down Payments:
  • San Francisco, CA (26.4%): No surprise here! San Francisco consistently tops the list for highest home prices in the nation. A 26.4% down payment there is massive, translating to a median of $375,000! This reflects the extreme cost of housing in the Bay Area. In my opinion, this is driven by a combination of high incomes in the tech industry, limited housing supply, and strong investor activity.
  • Anaheim, CA & San Jose, CA (25%): Following closely behind San Francisco, Anaheim and San Jose, also in California, show typical down payments of 25%. These are also incredibly expensive markets driven by similar factors as San Francisco – tech wealth, limited inventory, and high demand. It's clear that California's coastal markets require substantial upfront investment.
  • Why So High in California? California’s high down payment percentages are a reflection of sky-high home values. To even get into the market, buyers need to bring a significant amount of cash to the table. This creates a barrier to entry for many, especially first-time homebuyers.
• Lowest Down Payments:
  • Virginia Beach, VA (3%): Wow, 3%! That’s incredibly low compared to the national average. The median down payment here is only $10,033. Virginia Beach is a very different market from California. It’s likely that the high prevalence of VA loans in this metro, due to its large military presence, is a major factor in these lower down payments. VA loans often allow for zero down payment, bringing the average down significantly.
  • Detroit, MI (6.5%): Detroit also has a very low down payment percentage at 6.5%, with a median of $14,795. Detroit has seen a resurgence, but home prices are still relatively affordable compared to many other major metros. This affordability allows buyers to enter the market with smaller down payments.
  • Baltimore, MD (8.5%): Baltimore comes in with an 8.5% down payment, and a median of $28,400. Similar to Detroit, Baltimore's housing market is more accessible in terms of price, which contributes to lower down payment percentages.

Down Payments on the Move: Rising and Falling Metros

Interestingly, down payment percentages fell in 8 of the metros analyzed by Redfin.

• Biggest Declines:
  • Portland, OR (-4.6 percentage points to 15.4%): A significant drop in Portland. This could indicate a cooling market in Portland, where buyers are perhaps less willing or able to put down as much as before.
  • Orlando, FL (-3 percentage points to 15%): Orlando also saw a notable decrease. Florida has been a hot market, but maybe we're seeing some moderation, leading to less pressure for larger down payments.
  • Jacksonville, FL (-2.1 percentage points to 10%): Jacksonville, another Florida metro, also experienced a drop. This could be part of a broader trend in Florida, or specific to these local markets.
• Biggest Increases:
  • Charlotte, NC (+4.1 percentage points to 14.1%): Charlotte saw the biggest jump in down payment percentages. This could suggest a heating up of the Charlotte market, with increased competition and potentially rising home prices.
  • Minneapolis, MN (+1.4 percentage points to 11.4%): Minneapolis also saw an increase, although smaller than Charlotte's.
  • San Francisco, CA (+1.4 percentage points to 26.4%): Even in already high San Francisco, down payments increased further, reinforcing the intense pressure in that market.

FHA and VA Loan Hotspots

• Most Prevalent FHA Loans:
  • Riverside, CA (25.4%): Even though California has high down payments overall, Riverside stands out for FHA loan usage. This might indicate a different demographic in Riverside compared to super-wealthy Bay Area metros – perhaps more first-time homebuyers or moderate-income families relying on FHA loans to get into the market in a still-expensive region.
  • Providence, RI (25.1%): Providence also shows high FHA loan usage.
  • Las Vegas, NV (24.3%): Las Vegas rounds out the top three for FHA loans.
• Least Prevalent FHA Loans: Interestingly, the lowest FHA loan usage is also in California: San Francisco, San Jose, and Anaheim. This further highlights the two-tiered nature of the California market – ultra-high-end areas where FHA loans are less common, and more moderate areas where they are essential.
• VA Loan Strongholds:
  • Virginia Beach, VA (39%): Virginia Beach is the absolute leader in VA loan usage, which makes total sense given its massive military presence.
  • Jacksonville, FL (16.3%) & Washington, D.C. (14.3%): Jacksonville and D.C., also with significant military or government populations, show high VA loan usage as well.
• Least Prevalent VA Loans: Unsurprisingly, the Bay Area metros – San Jose, San Francisco, and Oakland – have the lowest VA loan usage.

All-Cash Kings and Queens (by Metro)

• Most All-Cash Purchases:
  • West Palm Beach, FL (50.4%): Over half of all home purchases in West Palm Beach are cash! Florida in general attracts retirees and second-home buyers who often pay in cash.
  • Cleveland, OH (46%): Cleveland is surprisingly high on the cash buyer list. This might be driven by investors taking advantage of relatively affordable properties in the area.
  • Jacksonville, FL (39.3%): Jacksonville also sees a high proportion of cash purchases.
• Least All-Cash Purchases:
  • Oakland, CA (16.2%), San Jose, CA (17.8%), Seattle, WA (18.8%): These tech-heavy, expensive metros show the lowest rates of all-cash purchases. Even wealthy buyers in these markets might prefer to leverage mortgages, perhaps for investment purposes.

The Takeaway:

So, what does all this mean for you if you're thinking about buying a home? The headline takeaway is that the typical down payment is around 16% right now. But as we've seen, “typical” is just an average. The actual down payment you'll need or choose to make will depend on a lot of factors:

• Your Location: Down payment norms vary significantly by city and region. What's typical in San Francisco is wildly different from Virginia Beach.
• Home Prices: The higher the home price, the larger your down payment will likely be in dollar terms, even if the percentage stays the same.
• Mortgage Rates: High rates might incentivize some buyers to put down more to reduce monthly payments.
• Loan Type: FHA and VA loans offer lower down payment options compared to conventional loans.
• Your Financial Situation: Ultimately, your down payment decision should be based on your personal finances, savings, and comfort level.

The housing market is always changing, and down payment trends are just one piece of the puzzle. Staying informed, doing your homework, and making smart financial choices are the keys to navigating it successfully.

If you're wondering what's in store for the housing market, the Home Value and Home Sales Forecast suggests a mixed bag for 2025. Expect a modest increase in home values (less than 1%), coupled with a slight uptick in home sales. Basically, don't expect a boom, but also don't brace for a bust. Let's dive into what's driving these predictions.

I've been following the real estate market closely for years, and while forecasts are just that – forecasts – they offer valuable insights into potential trends. Understanding these trends can help both buyers and sellers make informed decisions.

Home Value and Home Sales Forecast: What to Expect in 2025

Why the Modest Growth?

Several factors are contributing to this cautious outlook.

• Mortgage Rates: Mortgage rates are the biggest factor. Even if they dip slightly by the end of 2025, they're likely to stay high enough to keep many potential buyers on the sidelines.
• Inventory: The number of homes on the market is higher than previously anticipated. This increased inventory puts downward pressure on prices. This means buyers have more choices, and sellers may need to adjust their expectations.
• Economic Uncertainty: Overall economic uncertainty always plays a role. People are hesitant to make big financial decisions like buying a home when the future feels unclear.

Zillow's Predictions in Detail

Zillow's latest report gives us some specific numbers to work with:

• Home Value Growth: Zillow forecasts a mere 0.9% increase in home values for 2025. This is a significant downgrade from their previous projection of 2.9%.
• Existing Home Sales: They project 4.11 million existing home sales in 2025. This is essentially flat compared to 2023 and 2024 and remains well below pre-pandemic levels (5.3 million in 2019).
• Rent Increases: With many potential buyers staying put, rental demand is expected to rise. Zillow predicts a 3.7% increase in single-family rents and a 3.1% increase in multifamily rents.

What Does This Mean for You?

If you're thinking about buying or selling, here's how these forecasts could affect you:

• For Buyers: Don't expect a huge drop in prices, but you might have a bit more negotiating power due to increased inventory. Shop around for the best mortgage rates, and be prepared to act quickly if you find the right property.
• For Sellers: Don't overprice your home! The market isn't as hot as it was a few years ago. Work with a real estate agent to price your home competitively and highlight its best features.

Regional Differences: Where the Action Is (and Isn't)

It's crucial to remember that real estate is local. National forecasts only paint a broad picture. Some markets will perform better than others. Zillow highlights the areas they expect to see the strongest and weakest home price appreciation:

Top 10 Markets for Home Price Appreciation (January 2025 – January 2026):

• Knoxville, TN: 5.2%
• Atlantic City, NJ: 5.1%
• Torrington, CT: 4.8%
• Bangor, ME: 4.8%
• Kingston, NY: 4.7%
• Pottsville, PA: 4.7%
• Syracuse, NY: 4.5%
• Rochester, NY: 4.4%
• Norwich, CT: 4.4%
• Vineland, NJ: 4.3%

Bottom 10 Markets for Home Price Appreciation (January 2025 – January 2026):

• Lake Charles, LA: -7.3%
• Houma, LA: -6.4%
• New Orleans, LA: -5.1%
• Lafayette, LA: -4.1%
• Shreveport, LA: -3.9%
• Odessa, TX: -3.8%
• Beaumont, TX: -3.6%
• Chico, CA: -3.1%
• Midland, TX: -2.8%
• Alexandria, LA: -2.5%

Notice a pattern? The markets expected to do well are often more affordable, smaller cities. The struggling markets are concentrated in specific regions facing unique economic challenges.

A Word of Caution: Florida's Inventory Surge

While Zillow is generally optimistic about Florida's housing market, some analysts are more cautious. Florida has seen a significant increase in active inventory and months of supply. This suggests that prices could face downward pressure, and some data already shows single-family and condo prices declining in many Florida markets. Keep a close eye on local data if you're buying or selling in Florida.

My Take: It's All About the Long Game

Based on the forecasts and my own experience, here's my personal view on the 2025 housing market:

• Don't Expect a Repeat of the Pandemic Boom: Those days are gone. We're entering a period of more moderate growth.
• Focus on Your Personal Needs: Don't make a real estate decision based solely on market forecasts. Consider your financial situation, your lifestyle, and your long-term goals.
• Real Estate is Still a Solid Investment: Historically, real estate has been a good long-term investment. Even if prices don't skyrocket in 2025, owning a home can still provide stability and build wealth over time.

Beyond the Numbers: Factors to Watch

Besides mortgage rates and inventory, several other factors could influence the housing market in 2025:

• The Economy: A strong economy can boost consumer confidence and increase demand for housing. Conversely, a recession could dampen the market.
• Inflation: High inflation can erode purchasing power and make it harder for people to afford homes.
• Government Policies: Changes in tax laws or housing regulations can significantly impact the market.
• Demographic Trends: Shifts in population and household formation can influence housing demand. For example, the aging population is creating demand for senior housing, while millennials are entering their prime homebuying years.
• Construction Costs: Supply chain issues and labor shortages have driven up construction costs, making it more expensive to build new homes. This can limit supply and put upward pressure on prices.

The Bottom Line

The Home Value and Home Sales Forecast suggests a relatively stable housing market in 2025. While home values and sales are expected to increase slightly, don't anticipate a dramatic surge. By staying informed, working with professionals, and focusing on your personal needs, you can navigate the market successfully, whether you're buying, selling, or simply trying to understand the latest trends.

Ultimately, the housing market is complex and dynamic. There are no guarantees, and forecasts are always subject to change. However, by understanding the key factors influencing the market, you can make informed decisions and achieve your real estate goals.