Housing Market Outlook 2025: What Buyers and Sellers Need to Know

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The housing market in 2025 is showing clear signs of change. After years of rapid growth and rising borrowing costs, trends are shifting to create a different landscape for both buyers and sellers. Home price gains are slowing, mortgage rates are retreating from their highs, and inventory is gradually building, giving buyers more room to breathe.

Home Prices Are Cooling

National home price appreciation has slowed sharply compared to the pandemic boom. The S&P CoreLogic Case-Shiller Index reported just a 1.7% year-over-year increase in July 2025, a big drop from the 20%+ surges seen in 2020–2021. Similarly, the Federal Housing Finance Agency (FHFA) shows a 3.8% rise for Q2 2025.

Looking ahead, Zillow projects only a 1.2% increase over the next 12 months, and some analysts believe certain markets may even see flat or slightly negative growth.

The trend isn’t the same everywhere. Cities in the Midwest, like Cleveland and Chicago, are still posting gains above 4%, while several Florida and Western markets are seeing price pullbacks. Nationwide, listings are staying on the market longer and more homes are available, giving buyers more negotiating power than they’ve had in years.

Mortgage Rates Are Gradually Falling

Mortgage rates, which climbed above 7% in 2023 and early 2024, are finally easing. As of October 2025, the average 30-year fixed rate is around 6.3%. While that’s still higher than the historically low levels seen during the pandemic, it’s a welcome shift for affordability.

Experts forecast rates will hold in the low-to-mid 6% range through the rest of 2025, with the possibility of reaching the mid-5% range by late 2026 if inflation and economic conditions continue to improve. Even a small drop in rates can significantly reduce monthly mortgage payments, making homeownership more achievable for many buyers.

Why It Matters for Buyers and Sellers

These shifts signal a market that is moving toward balance. For buyers, slower price growth and modestly lower rates mean less risk of being priced out and better financing options. For sellers, the landscape is more competitive, homes may take longer to sell, and pricing strategy matters more than ever, especially with many homeowners hesitant to give up lower locked-in rates.

That said, affordability challenges remain. Years of rapid price growth combined with limited housing supply still make it difficult for some buyers to enter the market. Careful budgeting and local market research are key for both sides.

Final Thoughts

The two biggest challenges in recent years, fast-rising home prices and high mortgage rates, are starting to ease. While the adjustment won’t be overnight, the Housing Market 2025 outlook suggests conditions will continue to improve into 2026, creating new opportunities for those ready to buy or sell.

 The 2025 housing market is evolving, don’t make decisions without expert guidance.

📩 Contact me at TessMarquez.com | (626) 712-5156 or call/text anytime!

By Tess Marquez, Realtor & Probate Specialist | TessMarquez.com