Real Estate Trends to Watch in 2025

As we step into 2025, the real estate market presents a new landscape filled with both challenges and opportunities. With shifts in inventory, valuation, and buyer behavior, there are clear signs of change that could reshape the homebuying experience for first-time and step-up buyers alike. Here are the key trends to keep an eye on in the coming year:

1. Growing Inventory: A Welcome Boost for Buyers

According to the National Association of Realtors® (NAR), total housing inventory has seen a remarkable increase of 17.7% compared to 2023, with data provided through November 30, 2024. This translates to an additional 1.13 million homes on the market compared to the same time last year.

This surge in inventory is a game-changer for first-time and step-up homebuyers who have been patiently waiting for the opportunity to find the right home that meets their needs.

“Home sales momentum is building,” said NAR Chief Economist Lawrence Yun. “More buyers have entered the market as the economy continues to add jobs, housing inventory grows compared to a year ago, and consumers get used to a new normal of mortgage rates between 6% and 7%.”

This increased inventory offers buyers more options, giving them a better chance to shop, compare, and ultimately find a home that aligns with their budget and personal preferences.

2. Home Valuation: Rising Prices and Equity Opportunities

The median existing-home price for all housing types in 2024 was $406,100, reflecting a 4.7% increase from $387,800 in 2023. For existing homeowners, this rise in home values represents an opportunity to capitalize on the $15 trillion increase in housing equity that has accumulated over the past four years.

“Existing homeowners are leveraging their home’s appreciation gains to find properties better suited to their evolving needs,” Yun noted. Whether it’s upsizing to accommodate a growing family or relocating to a more desirable area, homeowners are using their built-up equity to unlock new possibilities in the market.

3. Speed of Sale: Market Dynamics Shifting

The pace of home sales has slightly adjusted, with properties typically remaining on the market for 32 days in 2024. This marks a slight increase from the median of 21 days on the market recorded in 2023. While homes continue to sell within a short period of time, we are witnessing an adjusted days on market that reflects a more balanced market for 2025 where buyers and sellers can negotiate terms that work for both parties.

4. Consumer Buyer Insights: Evolving Demographics for First-Time Buyers

In 2024, first-time buyers faced several hurdles, including rising home prices and increased mortgage rates. As a result, their market share of total homes purchased dropped to 24%, the lowest since NAR began collecting this data in 1981. Additionally, the median age of first-time buyers rose to 38 years, up from 35 years of age in 2023.

Despite these challenges, the dream of homeownership remains strong. For 22% of all buyers, the primary motivation for purchasing a home was the desire to own property. For first-time buyers, this sentiment was even more pronounced, with 64% citing homeownership as their top reason for entering the market.

What This Means for Buyers and Sellers in 2025

For prospective buyers, 2025 offers renewed hope. Increased inventory levels mean more options, while equity and appreciation growth provide current homeowners with the financial motivation to finally make changes in where and in what type of property they live in as their life circumstances change. We believe the mortgage rate "lock-in" effect will finally subside this year.

At First Home Partners, we are dedicated to making homeownership more attainable by streamlining the process of selecting on your behalf the right realtor and mortgage lender who has the right combination of industry experience and local market knowledge to fit your personal needs while taking advantage of our homeownership assistance benefit post home purchase.

Whether you’re stepping into the market for the first time or looking for a home that better fits your needs, 2025 holds promise for those ready to take the next step. Let’s make this the year you find the home you’ve been waiting for!