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US Housing Market Outlook 2025: Subdued Growth Despite Challenges
The US housing market is expected to remain largely frozen through 2025, with growth anticipated at a very subdued pace of 3% or less. Despite some positive signs, such as a slight increase in existing home sales and a rise in housing inventory, the market continues to face significant challenges.
According to J.P. Morgan, the supply of existing homes for sale is up roughly 20% year-over-year, but still remains near record lows, around 20-30% below prior troughs[1]. New homes for sale are at their highest level since 2007, and speculative homes for sale are at their highest since 2008. However, this increased supply is not expected to significantly boost the market, as demand remains exceptionally low.
Fannie Mae projects existing home sales to rise slightly from 2024 by 2.9%, but this would still reflect a pace down 22% from 2019[2]. The National Association of Realtors (NAR) reported an increase in existing-home sales numbers for the first time since 2021, with home sales rising 4.8% year-over-year in November 2024[4]. However, experts still expect 2025 to be a challenging year for the US housing market due to elevated mortgage rates and ever-rising home prices.
The wealth effect from borrowers with significant home equity and/or equity market growth is expected to maintain positive home price growth, though at a very subdued pace[1]. Existing borrowers are in good shape, and for those who own equities, there’s likely more money available toward down payments to effectively buy down the mortgage rate.
Regulatory changes and potential housing policy developments under the new presidential administration remain a wild card. President Trump has proposed reducing immigration to lessen demand and reduce housing costs, but this could exacerbate the lack of affordable housing by cutting labor supply in the construction industry[1].
In terms of supply chain developments, the cost of construction has risen sharply due to the COVID-19 pandemic and shortages of skilled labor, limiting the extent to which higher prices induce new supply[3]. Higher interest rates are constraining supply by adding to the cost of bank debt and other financing options for builders and developers.
US housing industry leaders are responding to current challenges by using concessions to drive sales, though a build-up of inventories in some key metros presents some downside risk to this forecast[2]. The National Association of Home Builders (NAHB) reported that future sales expectations were up to a nearly three-year high, with builders anticipating future regulatory relief in the aftermath of the election[4].
Overall, the US housing market is expected to remain challenging in 2025, with growth anticipated at a very subdued pace. Despite some positive signs, significant challenges such as elevated mortgage rates, ever-rising home prices, and tight supply continue to hinder the market.
This content was created in partnership and with the help of Artificial Intelligence AI
According to J.P. Morgan, the supply of existing homes for sale is up roughly 20% year-over-year, but still remains near record lows, around 20-30% below prior troughs[1]. New homes for sale are at their highest level since 2007, and speculative homes for sale are at their highest since 2008. However, this increased supply is not expected to significantly boost the market, as demand remains exceptionally low.
Fannie Mae projects existing home sales to rise slightly from 2024 by 2.9%, but this would still reflect a pace down 22% from 2019[2]. The National Association of Realtors (NAR) reported an increase in existing-home sales numbers for the first time since 2021, with home sales rising 4.8% year-over-year in November 2024[4]. However, experts still expect 2025 to be a challenging year for the US housing market due to elevated mortgage rates and ever-rising home prices.
The wealth effect from borrowers with significant home equity and/or equity market growth is expected to maintain positive home price growth, though at a very subdued pace[1]. Existing borrowers are in good shape, and for those who own equities, there’s likely more money available toward down payments to effectively buy down the mortgage rate.
Regulatory changes and potential housing policy developments under the new presidential administration remain a wild card. President Trump has proposed reducing immigration to lessen demand and reduce housing costs, but this could exacerbate the lack of affordable housing by cutting labor supply in the construction industry[1].
In terms of supply chain developments, the cost of construction has risen sharply due to the COVID-19 pandemic and shortages of skilled labor, limiting the extent to which higher prices induce new supply[3]. Higher interest rates are constraining supply by adding to the cost of bank debt and other financing options for builders and developers.
US housing industry leaders are responding to current challenges by using concessions to drive sales, though a build-up of inventories in some key metros presents some downside risk to this forecast[2]. The National Association of Home Builders (NAHB) reported that future sales expectations were up to a nearly three-year high, with builders anticipating future regulatory relief in the aftermath of the election[4].
Overall, the US housing market is expected to remain challenging in 2025, with growth anticipated at a very subdued pace. Despite some positive signs, significant challenges such as elevated mortgage rates, ever-rising home prices, and tight supply continue to hinder the market.
This content was created in partnership and with the help of Artificial Intelligence AI
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By Inception Point AiThe US housing market is expected to remain largely frozen through 2025, with growth anticipated at a very subdued pace of 3% or less. Despite some positive signs, such as a slight increase in existing home sales and a rise in housing inventory, the market continues to face significant challenges.
According to J.P. Morgan, the supply of existing homes for sale is up roughly 20% year-over-year, but still remains near record lows, around 20-30% below prior troughs[1]. New homes for sale are at their highest level since 2007, and speculative homes for sale are at their highest since 2008. However, this increased supply is not expected to significantly boost the market, as demand remains exceptionally low.
Fannie Mae projects existing home sales to rise slightly from 2024 by 2.9%, but this would still reflect a pace down 22% from 2019[2]. The National Association of Realtors (NAR) reported an increase in existing-home sales numbers for the first time since 2021, with home sales rising 4.8% year-over-year in November 2024[4]. However, experts still expect 2025 to be a challenging year for the US housing market due to elevated mortgage rates and ever-rising home prices.
The wealth effect from borrowers with significant home equity and/or equity market growth is expected to maintain positive home price growth, though at a very subdued pace[1]. Existing borrowers are in good shape, and for those who own equities, there’s likely more money available toward down payments to effectively buy down the mortgage rate.
Regulatory changes and potential housing policy developments under the new presidential administration remain a wild card. President Trump has proposed reducing immigration to lessen demand and reduce housing costs, but this could exacerbate the lack of affordable housing by cutting labor supply in the construction industry[1].
In terms of supply chain developments, the cost of construction has risen sharply due to the COVID-19 pandemic and shortages of skilled labor, limiting the extent to which higher prices induce new supply[3]. Higher interest rates are constraining supply by adding to the cost of bank debt and other financing options for builders and developers.
US housing industry leaders are responding to current challenges by using concessions to drive sales, though a build-up of inventories in some key metros presents some downside risk to this forecast[2]. The National Association of Home Builders (NAHB) reported that future sales expectations were up to a nearly three-year high, with builders anticipating future regulatory relief in the aftermath of the election[4].
Overall, the US housing market is expected to remain challenging in 2025, with growth anticipated at a very subdued pace. Despite some positive signs, significant challenges such as elevated mortgage rates, ever-rising home prices, and tight supply continue to hinder the market.
This content was created in partnership and with the help of Artificial Intelligence AI
According to J.P. Morgan, the supply of existing homes for sale is up roughly 20% year-over-year, but still remains near record lows, around 20-30% below prior troughs[1]. New homes for sale are at their highest level since 2007, and speculative homes for sale are at their highest since 2008. However, this increased supply is not expected to significantly boost the market, as demand remains exceptionally low.
Fannie Mae projects existing home sales to rise slightly from 2024 by 2.9%, but this would still reflect a pace down 22% from 2019[2]. The National Association of Realtors (NAR) reported an increase in existing-home sales numbers for the first time since 2021, with home sales rising 4.8% year-over-year in November 2024[4]. However, experts still expect 2025 to be a challenging year for the US housing market due to elevated mortgage rates and ever-rising home prices.
The wealth effect from borrowers with significant home equity and/or equity market growth is expected to maintain positive home price growth, though at a very subdued pace[1]. Existing borrowers are in good shape, and for those who own equities, there’s likely more money available toward down payments to effectively buy down the mortgage rate.
Regulatory changes and potential housing policy developments under the new presidential administration remain a wild card. President Trump has proposed reducing immigration to lessen demand and reduce housing costs, but this could exacerbate the lack of affordable housing by cutting labor supply in the construction industry[1].
In terms of supply chain developments, the cost of construction has risen sharply due to the COVID-19 pandemic and shortages of skilled labor, limiting the extent to which higher prices induce new supply[3]. Higher interest rates are constraining supply by adding to the cost of bank debt and other financing options for builders and developers.
US housing industry leaders are responding to current challenges by using concessions to drive sales, though a build-up of inventories in some key metros presents some downside risk to this forecast[2]. The National Association of Home Builders (NAHB) reported that future sales expectations were up to a nearly three-year high, with builders anticipating future regulatory relief in the aftermath of the election[4].
Overall, the US housing market is expected to remain challenging in 2025, with growth anticipated at a very subdued pace. Despite some positive signs, significant challenges such as elevated mortgage rates, ever-rising home prices, and tight supply continue to hinder the market.
This content was created in partnership and with the help of Artificial Intelligence AI