"US Housing Market Outlook 2025: Navigating Softening Prices and Shifting Trends"
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"US Housing Market Outlook 2025: Navigating Softening Prices and Shifting Trends"
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About this listen
The US housing market continues to face challenges in May 2025, with recent data showing mixed signals for both buyers and sellers. According to Zillow's latest forecast released on May 21, home values are projected to fall by 1.4% this year, which is an improvement from their previous expectation of a 1.9% decrease[1]. This downward pressure on home values is primarily attributed to rising inventory and soft sales volume this spring.
Existing home sales are now projected to reach 4.12 million in 2025, marking a modest 1.4% increase from 2024[1]. This figure has been revised downward from last month's forecast of 4.2 million. While buyers now have more options and time to make decisions, they appear hesitant due to lingering economic uncertainty.
In the rental market, Zillow projects single-family rents will rise by 3.2% in 2025, while multifamily rents will increase by 2.1%[1]. Despite lower rent increases expected this year, strong demand for single-family rentals is likely to keep rent growth relatively stable.
Construction trends show diverging paths for different housing types. Single-family home construction is expected to grow by 3% in 2025, while multifamily starts may decline by 4%, though a rebound is anticipated by 2026[3]. Homebuilder sales incentives continue to attract buyers to new construction despite the challenging market conditions.
According to J.P. Morgan's analysis from February, the housing market is likely to remain "largely frozen" through 2025, with price growth expected at a subdued pace of 3% or less[4]. Supply conditions vary across the country, with new homes becoming fairly plentiful while existing home inventory, though improving, remains below historical averages.
Recent data from March showed year-over-year price growth dipping to 2.5%, with lower mortgage rates boosting pending sales activity by approximately 12% compared to the same period last year[2]. Experts predict home-price appreciation will slow to an average growth of 2 percent for 2025, compared to 4.5 percent growth in 2024[5].
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