Forecasted Real Estate Growth in 2025 and 2026 by NAR: An Overview
The National Association of Realtors (NAR) has recently released its housing market forecast for 2025, predicting a 3% growth in the national median home prices. This growth is expected to be driven by several key factors, including moderating mortgage interest rates, strong income growth, a healthy housing inventory, and continued homebuyer demand.
According to NAR's Chief Economist Lawrence Yun, mortgage rates are anticipated to decline in the second half of 2025, making home loans more affordable and increasing buyer demand. The association expects mortgage rates to average around 6.4% in late 2025, down from prior highs, which encourages more buyers to enter the market.
Rising real incomes and a robust labor market with record-high jobs also support affordability and buyer confidence, helping to sustain home price increases despite higher rates earlier in the year. The association's forecast takes into account the increased participation from multigenerational households pooling incomes, which boosts potential buyers.
While inventory levels remain modest, increases in unsold inventory (6.2% higher year-over-year) support a more balanced market that can accommodate rising demand without extreme price spikes. Sluggish but positive GDP growth provides a stable economic backdrop that supports housing demand and price appreciation.
The housing market is hyper-local, and local economic conditions, inventory levels, and buyer demand will play a significant role in determining price movements at the local level. Over 600 metros are predicted to see price declines by 2026, while some regions are expected to remain resilient.
NAR's forecast also anticipates a 6% increase in existing-home sales and a 10% jump in new-home sales compared to 2024. The association predicts the addition of 1.6 million new jobs to the economy in 2025.
It is important to note that the actual trajectory of mortgage rates remains the biggest uncertainty in determining the housing market's future. Serious mortgage delinquencies remain low, reducing the likelihood of a large number of distressed properties hitting the market.
The rise of AI-powered hyperlocal real estate marketing is expected in 2025, providing homebuyers with more targeted and personalised property recommendations. For investors, services like Norada help discover turnkey real estate opportunities in cities forecasted for strong performance in both 2025 and 2026.
A modest price increase is generally good news for current homeowners' home equity. However, it is uncertain whether home prices will bottom out in 2025, with some housing markets set for double-digit price declines by early 2026. Real estate can thrive during tariffs-led economic uncertainty, but the housing market's future is subject to a range of economic factors.
In conclusion, the NAR's forecast suggests a housing market expected to gain momentum as affordability improves and mortgage rates ease in the latter half of 2025. Homebuyers and investors are advised to stay informed about local market conditions and economic trends to make informed decisions.
- The National Association of Realtors (NAR) forecasts a 3% growth in the national median home prices for 2025, driven by factors like moderating mortgage interest rates, strong income growth, and continued homebuyer demand.
- NAR's Chief Economist Lawrence Yun anticipates mortgage rates to decline in the second half of 2025, making home loans more affordable and increasing buyer demand.
- Inventory levels are expected to increase, supporting a more balanced market that can accommodate rising demand without extreme price spikes.
- NAR predicts a 6% increase in existing-home sales and a 10% jump in new-home sales compared to 2024, along with the addition of 1.6 million new jobs to the economy in 2025.
- The actual trajectory of mortgage rates is the biggest uncertainty in determining the housing market's future, with the rise of AI-powered hyperlocal real estate marketing expected in 2025, providing homebuyers with more targeted and personalised property recommendations.
- Investors can utilize services like Norada to discover turnkey real estate opportunities in cities forecasted for strong performance, though it's uncertain whether home prices will bottom out in 2025 with some housing markets set for double-digit price declines by early 2026.
