Mortgage professionals watching for a turning point in the housing market may find cautious optimism, though not much of it, in Realtor.com’s 2025 mid-year forecast, which emphasizes a slowly rebalancing market, a more favorable environment for buyers, and easing (though still elevated) mortgage rates.
The updated forecast revises its projection down to 4 million existing home sales for the year — slightly behind an earlier expectation of 4.07 million for 2025 and 4.06 million actual sales in 2024. By comparison, the 2013-2019 historical average for existing home sales was about 5.28 million, according to Realtor.com, a sizeable 32% higher than the downward-revised 4 million sales projection.
That in itself is pretty bleak. "Our initial expectations for 2025 were not overly bright from a home sales perspective," Realtor.com notes. "We anticipated just a small gain for the calendar year, on top of a 2024 that was the slowest annual total for existing sales since 1995 at just 4.06 million."
So that would make 4 million in existing home sales this year, should the forecast come to pass, the lowest existing-home sales total in the U.S. since Microsoft released its groundbreaking Windows 95 OS 30 years ago.
Meanwhile, though, the median home price is expected to climb 2.5%, a notable 44% slowdown from 2024’s 4.5% growth. Despite still-high mortgage rates, a slow rate decline expected through year-end could bring modest relief.
“We expect moderating growth and relatively contained inflation pressures to win out and help mortgage rates edge lower in the back half of 2025 ... the annual average mortgage rate matches what we saw in 2024 (6.7%) even as the rate moves just into the lower-6s (6.4%) by the end of 2025,” the forecast reads.
Even modest rate movement could be have an impact. For prospective homebuyers, that small dip translates to savings of nearly $70 per month on a $350,000 loan — roughly $830 per year.
Buyer Power Continues To Rise As Inventory Builds
In other positive news for affordability, home supply has moved into balanced territory, with inventory climbing 16.9% year-over-year.
“This trend toward a more balanced housing market remains intact as anticipated, with months supply already hitting a post-2016 milestone nationwide,” according to the forecast.
Even so, that's just the 30,000-foot view, and the market remains geographically uneven. Realtor.com notes “hotter” competition persists in the Northeast and Midwest, where inventory recovery has lagged. In contrast, sellers in the South and West are increasingly trimming prices as listings grow.
Not all sellers are budging, though, and an inventory rise doesn't necessarily spell price declines. Delistings — homes removed from the market without a sale — are up 47% year-over-year, a potential red flag that could “dampen supply and reduce the number of homes for-sale if they outpace new listings.”
Economic Conditions Stable, But Rate Outlook Uncertain
The broader economic backdrop is relatively stable: unemployment edged down to 4.1% and inflation is holding in the 2-3% range. The Fed has held rates steady in 2025 so far, following a full percentage point cut at the end of 2024.
“With both sides of the Fed’s dual mandate in a good position, the Fed has held its policy rate steady throughout 2025 after dropping it by a whole percentage point in the 4th quarter of 2024,” the forecast notes.
Still, looming concerns such as tariff-driven inflation and rising federal debt could keep mortgage rates from falling further.
Renters Still Sitting It Out
While affordability remains historically strained, renting continues to look appealing — especially for first-time homebuyers squeezed by high prices and tight budgets.
Rents are down 2.7% from their 2022 peak. Realtor.com reports that Pittsburgh was the only major U.S. metro where buying a starter home is more affordable than renting in June 2025.
SALT Deduction Boost May Aid High-Tax Markets
Recent policy shifts may offer some relief to homeowners in high-tax states. The One Big Beautiful Bill Act raised the SALT (State and Local Tax) deduction cap from $10,000 to $40,000, indexed annually until 2030.
This “is a welcome change in an environment where both median assessments and property tax burdens have increased in much of the country,” Realtor.com states.
