As 2024 draws to a close, it’s time for buyers, sellers, and renters to prepare for what the housing market will have in store next year.  

If you’re planning on snapping up a second home or parting ways with your property, the real estate sector is entering a new phase. As a refresher, home price growth hit 4 per cent in 2024, up from 1.1 per cent in 2023, while average mortgage rates hovered around 6.3 per cent, according to Realtor.com’s 2025 forecast. As of the third quarter, the median sale price in the United States was US$420,400 (approximately HK$3.26 million), a 32 per cent jump from Q3 2020. Rents nationwide rose as well, coming in at US$1,382 (approximately HK$10,745) a month in November which is 20 per cent higher than what they were in January 2020, The New York Times reported. 

“This past year brought us a surprising upward trend in home price growth despite the persistence of high mortgage rates and rising inventory,” Realtor.com economists wrote in the report. “Mortgage rates are expected to keep mortgage payments essentially unchanged in 2025 despite continued home price growth.” 

Per the experts, home prices are projected to soar an additional 3.7 per cent within the next year after hitting an all-time high. On the upside, when it comes to supply, inventory is expected to surge 11.7 per cent, making the market less competitive and giving buyers more time to negotiate. However, those who have been waiting on the sidelines may actually drive up the number of home sales in 2025. Redfin predicts approximately four million homes will be sold by the end of next year with an expected annual increase in the number of sales rising between 2 per cent and 9 per cent.

“Prices are going to keep rising because we’re not going to have a recession,” Ralph McLaughlin, a senior economist at Realtor.com, told Business Insider. “If you look at the times that home prices fall, it’s typically only when there’s a recession, and only when people are forced to sell.” 

If you’re a renter, prices won’t change all that much. The Realtor.com forecast sees asking rents actually declining albeit slightly as more units become available. Nationally, a construction boom which began in 2024 has significantly increased the number of available units. Over the summer, Zillow found that in June, more multifamily units were completed than any month in approximately 50 years creating more options for renters.