Home buyers and sellers will have more to worry about than housing prices and mortgage rates next year. How the incoming Trump Administration succeeds in implementing its stated economic goals also will have a major impact.
“The size and direction of a ‘Trump Bump’ will depend on what campaign proposals ultimately become policy and when,” says Danielle Hale, chief economist at Realtor.com. “The new administration’s policies have the potential to enhance or hamper the housing recovery.”
On the one hand, tax policies and regulatory changes could have a positive impact, making it less expensive to build and own houses. But on the other, larger tariffs, particularly on Canadian lumber, could have a negative effect, especially on home building, which already is woefully behind demand.
For now, it’s a wait-and-see situation. While the new president can move quickly on some changes, others policies will require a cooperative Congress, both houses of which are now controlled ever-so-slightly by Republicans, and the federal regulatory agencies.
On other factors, though, Realtor.com’s Hale expects a gradual improvement in more traditional market dynamics for 2025. Realtor.com is the official listing website of the National Association of Realtors, which has its own economics department.
In a report released today, the website’s economist doesn’t think mortgage rates will shift much, if at all, from their present level. But she does call for prices to continue rising and existing home inventories to keep growing. Again, though, she says a lot depends on the incoming government’s policies.
Take mortgage rates, which Hale expects to stay in the 6.3 percent range for must of the year. While the markets are expecting a higher-rate environment going forward, she says “the details will matter.”
Right now, there is “uncertainty” about which campaign promises will take priority and whether the specifics match what has been assured.
NAR’s Chief Economist Lawrence Yun is somewhat more optimistic than his counterpart at Realtor.com. At his group’s annual convention in Boston just after the November election, Yun predicted rates will hover near 6 percent for 2025. “That will be the new normal,” he told a convention session.
Meanwhile, Hale’s forecast for existing home sales calls for a slight 1.4 percent increase, to 4.07 million. And she expects the usually busy summer months to be busier than this year. At the same time, the economist expects the inventory of houses for sale to run higher, hitting a level not seen since December 2015.
NAR’s Yun is calling for a 10 percent jump in resales this year and another 10 percent increase in 2026.
Noting that one in five listings have already had at least one price cut, Hale believes buyers shopping in the existing home sector should see a “more friendly” and a “more balanced” market in 2025.
Sellers may still have the upper hand in markets with a constrained number of houses for sale, she said. But on the flip side, there could be fewer buyers able to afford every-rising prices, resulting in longer selling times.
At the same time, some markets could see double-digit jumps in sales, the Realtor.com forecast predicts. It is calling for a 27 percent increase in Colorado Springs next year, 24 percent in Miami-Ft. Lauderdale, 23 percent in Virginia Beach, Va., and 21 percent in Richmond, Va.
But in several places, sales will slow. Sales are predicted to fall 8 percent in Birmingham, Ala., and Madison, Wisc.; 10 percent in Scranton, Pa., and nearly 15 percent in Providence, R.I.
Overall, though, “buyers should expect a friendlier, less competitive housing market than in past years, although one that is still more costly because of stubbornly high mortgage rates and home prices,” Hale said,
As the economist sees it, however, the new home market should fare far better, “outperforming” the larger resale sector. Single-family starts will total 1.1 million in 2025, an “impressive” 13.8 percent gain from this year, she projected. That total hasn’t been reached since 2006.
“With a substantial construction deficit over the last decade, builders have room to run and may get an additional boost with a builder-friendly administration that understands the need for more construction,” Hale said.
