Purchasing a home in 2025 won’t be difficult; just be ready to put in a lot of effort.
ICE Mortgage Technology reported in November 2024 that the average-priced property has a principal and interest payment of $2,385 per month. It is nevertheless a significant growth of almost 80% from just three years ago, even though it is not the highest it has ever been. An average-priced home’s monthly payment and interest was $1,327 in November 2021, when mortgage rates were 3% on average.
The secret to purchasing in 2025 is as follows: Instead of looking back, look forward. You can’t budget for the new normal of today with regret.
Additionally, with this year’s election already behind us, there is a certain amount of hesitancy among buyers and sellers, which usually slows the market during each presidential election cycle.
According to Courtney Johnson Rose, president of the National Association of Real Estate Brokers, a trade association for Black real estate brokers, people have been essentially waiting to see what will happen. I’m optimistic that this year will see an increase in interest in, excitement for, and opportunity for first-time homebuyers to enter the real estate market.
Examine the forecast.
Getting ready to purchase a home is similar to preparing for the weather. It’s simpler when the weather is sunny, but you can prepare for any situation with a little preparation. Here are the predictions made by specialists in the housing market for the next year.
First, property prices: After soaring in recent years, we could expect more moderate increase in 2025.
The National Association of Realtors reports that the median price of existing homes sold in October was $407,200, following 16 months of year-over-year price gains. NAR chief economist Lawrence Yun predicts a typical existing-home sales price of $410,700 in 2025, up just 2% from this year, as more supply begins to trickle in to restrain price hikes.
The home inventory follows: Supply still can’t keep up with demand. Although a return to a buyer’s market is not anticipated, competition ought to be less ruthless.With an average supply of homes for sale of 4.1 months in 2025, Realtor.com predicts a balanced market, up from an average supply of 3.7 months in 2024 thus far. 2025 would then be the most buyer-friendly market since 2016, when the average supply was 4.4 months.
Lastly, mortgage rates: The 30-year mortgage rate has gradually decreased into the 6.5%–7% area this year after reaching a peak of 8% in October 2023. The Federal Reserve’s rate decreases have assisted in pushing that down. Forecasters now agree that rates will essentially plateau above 6% in 2025, despite prior optimism.
Nevertheless, there are wild cards in every year. How President Donald Trump and a Republican-led Congress might alter tax laws and regulations that impact the US home market in 2025 is still up in the air.
Decide on a budget.
The most important factor, your own cash flow, is not examined by national projections. Before making a purchase, find out how much you can afford by speaking with a financial advisor or using an internet calculator. A U.S. Department of Housing and Urban Development-sponsored housing consultant can also offer you free or inexpensive guidance.
Next, investigate mortgage lenders, local governments, charitable organizations, and state housing finance agencies for assistance with down payments and closing costs. Your labor union or employer may also be able to help. The most alternatives are available to first-time buyers whose income is below the region median, but some programs are also available to repeat or higher-income borrowers.
Rose says, “I believe that a lot of free money is being left out there.”
Look for a buyer’s agent.
An expert buyer’s agent may be your not-so-secret weapon for 2025 purchases.
According to Sharon Parker, associate broker with Tate & Foss Sotheby’s International Realty in Rye, New Hampshire, anyone can draft a contract. However, since every transaction is unique, you need someone who has experienced the market, its ups and downs, and who knows how to be innovative.
Buyers can now bargain for their agent’s fee up front after reaching a settlement with the NAR. (That work was previously performed by home sellers.) Rose claims that although the new rules are still being adapted to, she hasn’t noticed a lot of controversy since the change was implemented in August.
According to her, everything usually goes smoothly as long as purchasers keep in mind that we need to discuss this from the start of our partnership.
Buy and haggle
It’s time to look for a mortgage at last. Get quotes from at least three different lenders to find the best interest rate. A mortgage broker is another option; they can evaluate offers and potentially bargain for a lower rate on your behalf. Brokers have a fee, but overall savings are frequently possible due to their access to additional mortgage options and reduced rates.
Now that we have a mortgage preapproval in hand, we may proceed. And you don’t have to wait until spring: If you’re prepared to buy now, you may be able to get a good bargain because buyers have more negotiation power and less competition from December to February.
According to Parker, those who are buying and selling during the off-season are quite serious. They are more than just pretty things.
However, buyers have fewer options when inventory is reduced. Therefore, be ready to make concessions when you begin your search because a decent home will still contribute to your equity growth.
In 2025, should you purchase a home?
It’s acceptable to put off your search in order to increase your savings if a down payment or monthly mortgage payment is out of your price range. Furthermore, not everyone is suited for the lifestyle of home ownership due to the constant time and financial commitment. Avoid waiting for a decrease in mortgage rates once you’re ready to buy, whether it’s your first time, an upgrade, or a downsizing.
According to Parker, no one can forecast the future of the market or the entire planet. Now is the best moment of all time.
There will always be fluctuations in mortgage rates; you can refinance if they fall sharply. Being a homeowner is a huge financial boost for first-time buyers, and the sooner you buy, the more time you have to accumulate home equity.
According to Rose, the time worth of money is extremely important when it comes to real estate. Therefore, I would always advise someone to purchase as soon as possible and start the clock.
Abby Badach Doyle writes for NerdWallet. [email protected] is the email address.
