What to Expect From the Housing Market in the Next 12 Months

The housing market in 2025 continues to shift as buyers, sellers, and investors adjust to changing economic conditions. If you’re planning to make a move this year, understanding what lies ahead can help you make smarter decisions. Here are the key trends to watch in the next 12 months.

Interest Rates Will Shape Affordability

After the sharp increases of recent years, mortgage rates are expected to stabilize around the mid‑6% range. While this is higher than the record lows of a few years ago, it’s an improvement from recent peaks near 7%. Even a small drop in rates could make monthly payments more manageable for buyers, boosting demand.

Home Prices Will See Modest Growth

Unlike the rapid price jumps of the past, home values are projected to grow at a slower, steadier pace. Some markets — especially high-demand areas like Miami and other coastal cities — may see stronger growth, while others may level off as more inventory becomes available.

More Inventory, But Still Below Pre-Pandemic Levels

We’ll likely see a gradual increase in available homes as sellers re-enter the market, but supply is still not expected to fully meet demand. Buyers may find more options than in 2023 and 2024, but competition will remain, especially for well-priced, move-in-ready properties.

The Condo Market Will Face Pressure

Condo buyers should expect stricter lending standards and higher insurance costs, especially in coastal areas. While this may slow demand in older buildings, newer developments with modern safety and energy standards are likely to stay strong.

Rental Demand Will Remain High

As affordability challenges continue, many potential buyers will remain renters. This trend benefits real estate investors, as steady demand supports strong rental yields in most urban and suburban markets.

Luxury Homes Will Stay Resilient

High-net-worth buyers and international investors continue to drive the luxury segment, especially in Miami, Los Angeles, and New York. Demand for waterfront, resort-style, and branded residences is expected to remain steady throughout the year.