According to the latest forecast from the National Association of Realtors (NAR), home prices are projected to see moderate growth in the coming years, with a 2% increase anticipated in both 2025 and 2026. As reported by The Center Square, the median U.S. home price is expected to rise from $406,100 in November 2024 to $410,700 in 2025.
NAR economist Lawrence Yun noted that this slower pace of growth might be beneficial for balancing the market. “Home price growth could be more muted, more modest,” Yun explained. “Maybe it’s a healthy thing, we want income to catch up with home prices.”
The NAR forecast also predicts mortgage rates stabilizing near 6% in 2025, a level expected to become the “new normal.” This stability could bring more buyers back into the market, boosting home sales to a projected 4.5 million existing-home units in 2025, up from the current annual pace of 4.15 million units. Yun added that the Federal Reserve is expected to ease monetary policy gradually, potentially providing further relief to buyers.
Inventory levels are showing signs of improvement, driven by new construction and more homeowners deciding to list their properties. Housing starts are projected to reach 1.45 million units annually in the coming years, just shy of the historical average of 1.5 million units.
“Home buyers will have more success next year,” Yun said. “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 achieve homeownership.”
The NAR forecast brings hope for a more balanced housing market, offering opportunities for buyers and easing affordability concerns.
Credit to The Center Square for this report.
