The real estate market is shifting – again. If you’re wondering what the heck is going on and how to navigate 2025 and beyond, you’re in the right place. In this session, we’re diving into real estate market predictions for the coming year, plus actionable strategies for agents to thrive no matter what the market throws their way.
Before we get into the details, stay tuned until the end—we’ve got a free guide on how to win more listings with powerful listing presentations.
A Quick Look at the Real Estate Market: Where Are We Now?
To understand where the residential real estate market is heading, we need to take stock of where we are now. Mike Simonsen, founder of Altos Research, has been tracking real estate data for nearly two decades, analyzing every home for sale, pricing trends, supply and demand, and new listings.
According to Mike, there are three fundamental questions every real estate professional needs to answer for their clients:
- What’s for sale? (Active listings and inventory trends)
- How much is my house worth? (Pricing, CMAs, and valuations)
- How’s the market? (Everything else—interest rates, market conditions, and timing)
Right now, buyers and sellers are asking the same big question: How’s the market? Is it crashing? Is now the right time to buy or sell? That’s what we’ll explore next.
Real Estate Market Predictions 2025: What to Expect
As we look ahead to 2025, real estate professionals need to prepare for another year of shifts in the residential real estate market. Based on data from Altos Research and industry trends, here are the key factors shaping the market:
Inventory Trends in Real Estate: More Homes on the Market, But Still Below Pre-Pandemic Levels
One of the biggest challenges in 2024 has been low inventory. Many homeowners have locked in historically low mortgage rates, making them reluctant to sell. Unless interest rates drop significantly, we’re not likely to see a surge in listings in 2025.
Right now, 624,000 single-family homes are actively listed across the U.S.—a 24-25% increase from last year. That’s three straight years of rising inventory, a sign that the housing market is gradually normalizing.
However, we’re still not back to pre-pandemic levels. Before 2020, peak inventory levels in the summer reached 1.2 million homes. Today, we’re hovering around 700,000.
So what’s next? Inventory will continue to grow in 2025, but the pace depends on mortgage rates:
- If rates stay in the 7% range, inventory will keep climbing.
- If rates drop closer to 6%, growth will slow.
- If rates fall below 6%, inventory growth may stall altogether.
This is critical for agents to understand when advising clients on timing their transactions.
Regional Differences: Some Markets Are Already Back to Pre-Pandemic Inventory
Not every market is experiencing the same trends.
- Sun Belt States (Texas & Florida) – Areas like Austin, TX, now have more inventory than at any time in the past 12 years. These markets are leading the inventory surge.
- Northern Markets (Chicago, Ohio, Connecticut) – These areas are still tight on supply, with inventory levels barely above pandemic lows.
For agents, this means local market conditions matter more than national trends when advising buyers and sellers.
For years, migration patterns fueled strong demand in the Sun Belt. People moved from places like Chicago to Dallas, from New York to Florida, and from the Midwest to Phoenix.
- But in 2024, that movement slowed down significantly due to:
Higher costs of moving – With mortgage rates in the 7% range, many homeowners are staying put. - Stable employment but low hiring – People aren’t quitting their jobs, meaning fewer relocations.
- The “Great Stay” effect – Homeowners are holding onto their low mortgage rates instead of selling.
The result? Tight inventory in the Midwest and Northeast, while supply grows in the South and West.
What Does This Mean for Home Prices in 2025?
In tight inventory markets (Chicago, New York, Connecticut, Illinois):
- Home prices are strongest in these states due to fewer listings.
- Sellers have more control, meaning well-priced homes still get competitive offers.
In high-inventory markets (Texas, Florida, Arizona, Colorado):
- More homes are for sale, giving buyers better selection.
- Sellers may need to be more competitive with pricing and concessions.
For homeowners who have been considering selling in the Midwest or Northeast, 2025 could be the perfect time to cash in before inventory normalizes.
Will Inventory Keep Growing in 2025?
Current projections expect a 15% gain in inventory by the end of 2025, bringing us closer to pre-pandemic levels but not quite there yet.
What Should Agents Tell Buyers & Sellers Right Now?
Agents need to adjust their messaging based on local inventory trends:
For sellers in high-inventory markets:
- Price strategically to stay ahead of competition.
- Be prepared for longer days on market and potential price adjustments.
For sellers in low-inventory markets:
- Now is a great time to sell before more inventory comes online.
- Use price strength to leverage a move to a lower-cost market.
For buyers in high-inventory markets:
- More options and less competition mean better negotiating power.
- Watch for price adjustments, especially in over-supplied areas.
For buyers in low-inventory markets:
- Act fast on well-priced homes.
- Be prepared for strong pricing and limited selection.
Will More Inventory Lead to a Home Price Crash?
Many consumers assume that rising inventory will lead to falling home prices, but the data doesn’t support a major crash.
Key Indicators to Watch:
- New listings per week – We’re seeing more new listings than in 2023, but still within normal levels.
- Seller behavior – If we suddenly see a surge of investors offloading properties or distressed sellers, that could push prices downward.
For now, the market is normalizing, not collapsing. However, sellers should consider listing sooner rather than later before competition increases.
Mortgage Rate Real Estate Market Predictions for 2025: What Agents Need to Know
Mortgage rates have been the biggest market challenge for agents over the past two years, keeping both buyers and sellers hesitant. With rates hovering above 7 percent, many transactions have stalled. The key question for 2025 is: Will rates finally drop, and how should agents adjust their strategies?
What’s Driving Mortgage Rates in 2025?
As an agent, understanding the factors influencing rates will help you guide clients more effectively. Several key forces will shape where mortgage rates go next year:
- Federal Reserve Policy – If the Fed starts cutting interest rates as expected in 2025, mortgage rates may ease slightly. However, the timing and pace of those cuts remain uncertain.
- Inflation Trends – If inflation remains under control, rates will have more room to drop. If inflation resurges, the Fed may hold rates higher for longer, keeping mortgage rates elevated.
- Economic Strength – A slowing economy could push rates down, but a strong job market could keep them steady. Agents should watch hiring trends, as job stability influences homebuyer confidence.
- Housing Market Stability – If inventory rises and demand remains steady, lenders may adjust rates to stimulate borrowing. However, rapid shifts in either direction could create new challenges.
How Should Agents Prepare for Mortgage Rate Shifts?
With rates likely to decline gradually but not dramatically, agents need to focus on adapting their messaging and strategies rather than waiting for a major market shift.
- Help clients adjust their expectations – Many buyers and sellers are waiting for rates to “crash” back to pre-2022 levels. Agents must educate them on realistic rate trends and emphasize that waiting may not significantly improve affordability.
- Stay ahead of rate movements – Agents who actively track mortgage rate forecasts can provide timely market updates to clients. Sharing expert-backed predictions in emails, social media, and listing presentations can position you as a trusted advisor.
- Leverage lender partnerships – Work closely with lenders who offer rate buydown programs, adjustable-rate mortgages (ARMs), and creative financing options. Educating your clients on these strategies can help them move forward with confidence.
- Shift marketing strategies based on rate trends – If rates start to drop, highlight “improved affordability” messaging in your marketing. If rates stay high, focus on inventory opportunities and the benefits of buying or selling in the current market.
- Target move-up sellers strategically – Many homeowners are sitting on historically low rates, making them reluctant to sell. Agents who provide clear financial comparisons showing how a move still makes sense—whether through increased equity, lifestyle benefits, or smart financing—can unlock new listings.
Speaking of interest rates, their movement will heavily influence the market. If rates decline, more buyers will enter the market, increasing demand. If they stay high, affordability issues will persist, and some markets may cool further.
Will There Be Enough Buyers in the Market?
Buyer demand remains uncertain, but a few trends are emerging:
- First-time buyers are still active – Even with high rates, demand exists from buyers who need to move. Many have been waiting for better affordability and could return in greater numbers if rates improve.
- Investors are being cautious – Institutional and small-scale investors are not driving the market as aggressively as in previous years. The rise in inventory in some regions means investors are being more selective.
- Move-up buyers are hesitant – Homeowners with low mortgage rates are reluctant to sell and buy at higher rates, keeping this segment of the market slow.
If mortgage rates fall and inventory continues growing, expect home sales to gradually increase in 2025, but not return to pre-pandemic highs.
Home Prices Will Stabilize, Not Crash
With limited supply and fluctuating demand, home prices in most areas are expected to remain stable or see modest increases. A major crash is unlikely, as demand still outpaces supply in many regions.
Buyer and Seller Behavior Will Shift
- Buyers will continue to be price-sensitive, focusing on affordability and waiting for better rates.
- Sellers may need to adjust their expectations, especially if homes sit on the market longer than in previous years.
Real estate agents who understand these trends will be better positioned to guide their clients through the uncertainty and make smarter moves in 2025.
Will Home Sales Increase in 2025?
The data suggests modest growth in transaction volume this year, but nothing dramatic.
- 2024 ended with 4 million home sales.
- 2025 is projected to reach 4.2 million, a 5% increase.
- A 7-8% increase would be considered a strong year, but hitting 10% growth is historically rare.
Momentum from late 2024 gave some hope for a rebound, but rising interest rates in early 2025 have slowed things down again.
If mortgage rates stay in the 7% range, expect continued sluggish transaction volume. But if rates drop closer to 6%, more buyers and sellers could return, leading to a stronger year.
For agents, this means:
- Stay ahead of mortgage rate trends. If rates dip, push hesitant buyers and sellers to take action before they miss the window.
Set realistic sales expectations. Growth will be slow, so focus on market education and strategic client guidance rather than waiting for a dramatic surge.
Home Sales Will Increase—But Growth Will Be Slow
Right now, home price appreciation is slowing, but no major crash is expected.
- Current median home price: $375,000
- Prices are up just 1.4% year-over-year, compared to 4-5% growth in 2024
- More inventory means less upward pressure on pricing
Some markets—especially those with high inventory like Texas and Florida—may see slower price growth or slight declines.
Home Sales Will Increase—But Growth Will Be Slow
Other regions—particularly tight inventory areas like the Midwest and Northeast—will likely see prices hold steady.
For agents, this means:
- Educate sellers on strategic pricing. Overpricing leads to longer days on market and price cuts.
- Track local inventory trends. National pricing trends don’t tell the full story—your market’s inventory levels will determine whether prices hold or soften.
- Monitor rate movements. If rates drop, expect more buyer activity, which could stabilize pricing.
What Will Drive Home Sales in 2025?
One of the biggest questions in the real estate market is whether home sales will increase after hitting multi-decade lows in 2023 and 2024. With inventory rising and mortgage rates fluctuating, many are wondering if transaction volume will finally grow.
According to market data, home sales could increase in 2025, but the pace of recovery will depend on several key factors.
Several forces will determine whether transaction volume picks up next year:
- Mortgage Rates – The biggest driver of home sales will be interest rates. If rates stay in the 7 percent range, affordability will remain a challenge, keeping sales low. If rates drop closer to 6 percent or below, buyers will return, and transactions will increase.
- Inventory Growth – More homes on the market mean more opportunities for buyers, but sales will only rise if prices remain in check. If inventory continues increasing at a steady pace, it could help balance the market and encourage more transactions.
- Seller Behavior – Many homeowners have been reluctant to sell due to low mortgage rates locked in during the past few years. If more sellers enter the market, it could create more movement, leading to increased sales.
- Economic Conditions – A strong job market has kept demand stable, but low hiring rates have reduced job relocations, limiting sales. If hiring picks up, more people will move for work, increasing transaction volume.
Agents Who Out-Market Their Competition Will Win
As an agent, understanding home sales volume and pricing trends is crucial for staying ahead of market shifts. While transaction volume showed signs of recovery in late 2024, rising mortgage rates in early 2025 have slowed that momentum.
The big questions agents need to answer:
- Will home sales actually increase this year?
- Will home prices hold steady, rise, or decline?
- How should agents adjust their sales and pricing strategies to stay competitive?
Let’s break it down.
Agents need to shift their approach based on sales volume and pricing trends.
- For listing agents
- Help sellers price competitively from day one to avoid sitting on the market.
- Show sellers how regional inventory affects their home’s value—avoid relying solely on national trends.
- Market aggressively in high-inventory markets where buyers have more choices.
- For buyer’s agents
- Emphasize negotiation opportunities in high-inventory areas.
- Educate buyers on long-term affordability vs. waiting for lower rates.
- Stay in touch with hesitant buyers—if rates drop, they need to be ready to act fast.
- For all agents
- Use local data in your marketing. Highlight how your specific market is trending instead of generalizing national numbers.
- Stay flexible in your approach. If rates drop mid-year, be ready to shift messaging and outreach strategies immediately.
- Be the expert clients turn to. Consistently sharing real-time insights on sales trends, pricing, and mortgage rates will set you apart from the competition.
Key Takeaway for Agents in 2025
The real estate market isn’t crashing, but it’s not booming either. A 5% increase in home sales is expected, and home prices will stay stable in most areas but soften where inventory is high.
The agents who succeed in 2025 will be those who:
- Track and share market trends proactively
- Help sellers price strategically and set realistic expectations
- Position buyers to act quickly if rates drop
- Stay flexible and adjust strategies based on rate movements and local demand
The 2025 real estate market will demand adaptability, smarter strategies, and stronger presentations from agents who want to thrive. While some agents will sit on the sidelines waiting for conditions to improve, the top performers will pivot, refine their approach, and take market share.
Let’s talk about how to win more listings, build your brand, and take advantage of slower times to set yourself up for long-term success.
Listings Are Gold: Why Every Lead Matters in a Slow Market
In markets where transactions have slowed, winning every listing becomes critical. If fewer homes are selling, that means fewer listing opportunities—so when you get a chance, you cannot afford to lose it.
How to Win More Listings in 2025:
- Upgrade your listing presentations – Sellers need to be convinced you’re the right agent. A polished, interactive presentation (like those built with Highnote) can set you apart.
- Use real-time market data – Sellers want proof of market conditions. Tools like Altos Research help show pricing trends and justify pricing strategies.
- Educate sellers on pricing strategy – With price cuts increasing, sellers who overprice will lose time and money. Your job is to set expectations upfront.
Follow up relentlessly – Some sellers are hesitant to list. Stay in touch so that when they’re ready, they choose you.
If you don’t have a winning listing presentation yet, now is the time to refine it. Every single listing matters in a slower market.
Expand Your Services: Rentals & Property Management Are Huge Opportunities
In some cities, inventory is low and sellers are holding onto their homes, choosing to rent rather than sell. If you only focus on sales, you’re missing out on a massive opportunity.
Why Agents Should Consider Rentals & Property Management:
- Many homeowners don’t want to sell at today’s rates but still need guidance. Be the go-to resource.
- Offering rental services keeps you in front of future sellers—they’ll call you when they’re ready to list.
- A strong property management network builds recurring revenue and increases your value to investors.
If you don’t want to manage rentals yourself, partner with a property management firm and become the referral point for those leads.
Take Market Share: The Best Agents Dominate During Slowdowns
The agents who thrive in a slower market are the ones who ramp up their marketing, not pull back. Many agents will start cutting back on spending, social media, and outreach—but that’s a mistake.
How to Stand Out in 2025:
- Increase your marketing presence – While others go quiet, you should be doubling down on email campaigns, social media, and direct mail.
- Be the local market expert – Share real-time market trends, inventory updates, and pricing insights. Position yourself as the go-to source for market knowledge.
- Nurture your database aggressively – Stay in touch with leads through consistent value-driven follow-ups. Even if they aren’t ready to move now, they will remember you when they are.
- Leverage content marketing – Start a blog, create videos, or host market update webinars. The more you educate your audience, the more they trust you.
In the last downturn, many agents left the industry because they couldn’t adapt. The ones who stayed and marketed aggressively gained the most market share when things rebounded.
Final Real Estate Market Prediction Takeaways: Your Game Plan for 2025
The 2025 real estate market will be a test of who adapts and who waits. The agents who embrace data-driven pricing, strong listing presentations, expanded service offerings, and aggressive marketing will take the most business.
Here’s your action plan:
- Refine your listing presentation and win every seller lead
- Leverage market data to price listings right and set expectations
- Offer rental and property management solutions in slow markets
- Out-market your competition while they pull back
- Stay consistent and top-of-mind with potential clients
This is the year to step up and take more business while others hesitate.
Get the Free Guide: Win More Listings in a Slower Market
If you’re serious about increasing your listing conversion rate, grab the free guide on how to create a winning listing presentation. It breaks down the exact strategies successful agents use to stand out and close more deals—even in a challenging market.
