The 2025 U.S. housing market will face a mix of competing forces that could lead to moderate gains, according to the Bright MLS Housing Forecast. While pent-up supply and demand may bring more buyers and sellers into the market, economic and political uncertainty could prevent a strong rebound.

Bright MLS expects mortgage rates to average 6.4% in 2025, remaining above 6% throughout the year and ending at 6.25% by Q4. This will continue to challenge affordability, especially for first-time and moderate-income buyers.

The number of existing home sales is projected to increase by 7.5% year-over-year, reaching 4.4 million — still below the long-term average of 5.2 million. Inventory will rise by 12.5%, bringing available homes to 1.32 million, nearing 2019 levels. As more sellers enter the market, the inventory increase will be tempered by a slowdown in new construction. The demand for existing homes will grow as fewer new homes come onto the market, but the affordability gap will continue to impact buyers in certain regions.

Despite more choices, home prices are expected to rise by 3.1%, reaching a median of $418,390, but the pace of growth will slow compared to previous years. The housing market will be influenced by broader economic factors, including inflation risks and political decisions such as proposed fiscal policies from the incoming Donald Trump administration. While some buyers will be motivated to enter the market due to more inventory and less aggressive price growth, many will still be sidelined by high mortgage rates. Higher-income markets are expected to see the strongest price growth, while moderate-income areas may experience slower growth or even price declines.

“Higher-income households and homeowners likely will fare better in the 2025 housing market than will entry-level and moderate-income buyers,” said Bright MLS chief economist Lisa Sturtevant. “Metros where overall household incomes are lower are more at risk of a weakening housing market, while higher-income metros — even those where home prices are very high — are projected to see stronger price growth,” she said. “As such, many of the higher-cost metros — including Boston, New York City, and Washington, D.C. — are projected to have faster price growth in 2025 than the national average.”