Zillow predicts more buyers will come out ahead in a bumpy 2025 By Investing.com

Unpredictable mortgage rates will play a big role in shaping next year’s housing market

• The housing market is expected to slowly become unstuck, but mortgage rates could be a spoilsport, with their unpredictability expected to make planning for a home purchase a challenge.  
• Buyers markets will spread to the Southwest unless rates fall dramatically.
• As the biggest multifamily construction boom in 50 years fizzles out, Zillow predicts fewer rent concessions in the second half of 2025.

SEATTLE, Nov. 25, 2024 /PRNewswire/ — Mortgage rates are once again in the spotlight as 2025 approaches.  Zillow ® predicts a more active housing market and more buyers gaining the upper hand in 2025, but those hoping to buy ” or even refinance ” should buckle up for a bumpy ride and stay ready to move when conditions are right.

“Buying a home in 2024 was surprisingly competitive given how high the affordability hurdle became. More inventory should shake loose in 2025, giving buyers a bit more room to breathe,” said Skylar Olsen, Zillow chief economist. “Americans are adapting to sky-high costs by embracing coziness, a term that for so long has been a thinly veiled critique in real estate lingo. Many are also viewing renting as a longer-term lifestyle. A construction boom has eased pressure on rent prices, putting rent affordability on track to improve next year ” that is, as long as wages continue to grow.”

Housing market activity will pick up
Expect to see more sales and only modest home value growth in 2025 as the market slowly becomes unstuck.

Zillow forecasts 2.6% home value growth in 2025, a relatively slow pace that is similar to this year’s growth. For existing home sales, Zillow forecasts 4.3 million in the coming year, up slightly from 4.1 million in 2023 and a projected 4 million in 2024.

While affordability challenges will remain, buyers should expect more homes on the market, meaning more time to consider their options and more leverage in negotiations.

Mortgage rates will fall (then rise, then fall again)
Signs point to mortgage rates easing in 0225, but as we saw in 2024, mortgage rates rarely follow the expected path. What is more certain is that buyers should expect plenty of ups and downs throughout the year.

Mortgage rates fell in September, briefly bringing the share of affordable listings to a 19-month high. They have since climbed back to nearly 7%,¹ changing the affordability picture for home buyers. More swings like this are expected in 2025,…