The real estate landscape in 2025 continues to challenge buyers, sellers, and investors alike. At the recent National Association of Realtors (NAR) Legislative Meetings in Washington, D.C., Lawrence Yun, NAR’s Chief Economist, offered a sobering but realistic outlook: “The housing market remains very difficult at the moment.”
While there are glimmers of improvement ahead, Yun’s projections underscore just how intertwined mortgage rates, inflation, and Federal Reserve policy are in shaping today’s market. In this article, we break down Yun’s insights and what they mean for anyone navigating the real estate world right now, and how Boutique Realty can help guide you through the turbulence.
Current Market Conditions: A Challenging Environment
According to Yun, the primary drag on housing recovery is the persistent elevation of mortgage rates, which have put homeownership further out of reach for many. With rates climbing sharply over the past two years, affordability is at its lowest point in over a decade.
“The fast ascent of mortgage rates has really hurt the real estate market,” Yun said. “This is what’s killing the housing market… we’re waiting and waiting until those come down.”
In addition, the Federal Reserve has paused further rate cuts until inflation cools more consistently. While the inflation rate has dropped to 2.3%, it’s still above the Fed’s 2.0% target. That means relief from interest rate hikes isn’t here just yet but could be close.
What’s Ahead: Hope on the Horizon?
Despite these headwinds, Yun shared a cautiously optimistic forecast for the near future:
- Existing home sales are expected to grow by 6% in 2025 and 11% in 2026
- New home sales could rise by 10% in 2025 and 5% in 2026
- Home prices are projected to increase 3% in 2025 and 4% in 2026
- Mortgage rates are expected to average 6.4% in late 2025 and drop to 6.1% in 2026
These projections indicate that while recovery may be slow, a healthier market may be coming into view, especially if inflation remains under control and the Fed begins to lower interest rates.
What This Means for Buyers and Sellers
For buyers, this environment presents both challenges and opportunities. On one hand, higher rates make it harder to afford monthly payments. On the other, reduced competition and price stabilization may offer a window to find a great home before rates fall again and demand spikes.
For sellers, pricing realistically and preparing homes for listing is more crucial than ever. With fewer buyers in the market, well-marketed, move-in-ready homes are the ones that stand out.
Whether you’re buying, selling, or just exploring your options, working with a local expert who understands the market trends is key.
Boutique Realty: Your Guide in a Changing Market
At Boutique Realty, we understand that market conditions are constantly shifting and we’re here to help you navigate every twist and turn with confidence.
We offer:
- Personalized market insights based on your goals
- Strategies to price your home competitively
- Buyer support from financing to closing
- Expert advice on timing, investment, and long-term value
Our boutique approach means you’re never just a transaction. We’re your partner in making smart, informed real estate decisions even in uncertain times.
Conclusion: Cautious Optimism and the Need for Expert Guidance
While the housing market remains difficult today, the forecast for 2025 and beyond includes slow but steady improvement. With expected gains in home sales and modest price appreciation, there is hope on the horizon for both buyers and sellers.
In the meantime, the best move you can make is to work with a knowledgeable, trustworthy real estate team who understands both national trends and your local market.
Looking for help navigating today’s market? Contact Boutique Realty today.
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Let’s turn uncertainty into opportunity together.