The Housing Market in 2025: What Buyers and Sellers Need to Know

The housing market has been a rollercoaster in recent years, and 2024 was no exception. According to the National Association of Realtors, existing home sales dropped to around 4 million last year—the lowest level since 1995. As we look ahead to 2025, what can buyers and sellers expect? To shed light on this, we spoke with real estate broker and president of New York-based firm, Stephanie Berken.

Mortgage Rates: Where Are We Now?

Mortgage rates have been a major talking point, and for good reason. As of this morning, rates are hovering in the high 6s, around 6.875%, with occasional dips into 7.0%. Berken remains cautiously optimistic about 2025, predicting a slight easing of rates. However, she advises buyers to adjust their expectations.

“Plan for rates in the 6s and be pleasantly surprised if they dip lower,” she says. “But don’t hold out for 3%—that’s unlikely to return anytime soon.”

Berken also clarifies that mortgage rates don’t directly follow the Federal Reserve’s actions. Instead, they’re more closely tied to the 10-year Treasury yield. So, while headlines about Fed rate cuts may grab attention, their impact on mortgage rates is gradual.

Inventory Challenges: Buyers vs. Sellers

The current housing market is marked by tight inventory, largely because many homeowners are reluctant to give up their sub-4% mortgage rates. This has created a bottleneck, with buyers facing pent-up demand in an already unaffordable market.

Berken notes that while new construction and slight rate reductions may help ease the supply crunch, the changes will be incremental. “We’re seeing small, steady improvements that will lead us toward a more stable market,” she explains. “Don’t expect drastic shifts—think gradual progress.”

Tips for Buyers: Be Prepared

For buyers navigating this competitive landscape, Berken emphasizes the importance of understanding your finances. “Start by going through the motions of getting pre-approved for a mortgage,” she advises. “This will help you get organized, understand your liquidity, and know what you can afford.”

She also recommends exploring assistance programs, which can help with down payments and closing costs. “It’s never too late to start saving,” she adds, particularly addressing millennials and Gen Zers. “Set aside a portion of every paycheck for your home-buying fund.”

Interestingly, the profile of buyers is shifting. The median age of homebuyers is now 38, and more single women are entering the market, outpacing single men. Berken also notes an increase in cash buyers, as some opt to bypass the traditional mortgage process.

Advice for Sellers: Timing and Strategy

For sellers, timing is everything. Berken suggests listing your property at the end of February or early March, just before the spring market heats up. “Prepare your home now,” she says. “Follow the acronym PLANS: Price strategically, Light up your home, Ask a seasoned agent for help, Negotiate creatively, and Stage for success.”

She highlights the importance of pricing your home correctly from the start. “Overpricing can deter buyers, so be strategic,” she warns. Additionally, small touches like increasing lighting and staging can make a significant difference in attracting offers.

The Road Ahead

While the housing market has faced significant challenges in recent years, Berken believes the worst is behind us. “We’ve turned the corner,” she says. “The market is trending toward normalcy and stability, with small, steady improvements leading the way.”

For both buyers and sellers, the key is to stay informed, be prepared, and adjust expectations. Whether you’re entering the market for the first time or looking to sell, understanding the current dynamics will help you navigate the road ahead with confidence.

As 2025 approaches, the housing market may not be perfect, but it’s moving in the right direction—one step at a time.