Housing Market 2025: Prices, Rates & Buyer Struggles Explained

The Housing Market is Flashing Warning Signs
Wondering what housing market are we in right now? The short answer: a challenging one.

According to the latest from Capital Economics, the real estate housing market is still flashing warnings — from stubbornly high mortgage rates to affordability issues that are especially squeezing Gen Z and millennial first-time buyers. There’s simply no quick fix in sight.

Let’s break it all down so you can make the best decisions in 2025, whether you’re buying, selling, or investing.

1. Mortgage Rates Are Stuck Above 6.5%
The big story? Mortgage rates are expected to stay over 6.5% until at least 2026. That means monthly payments will keep a lot of would-be buyers on the sidelines.

It also keeps many homeowners locked into their existing low-rate loans, which limits new listings. Fewer homes for sale means continued pressure on housing market prices.

2. Buyers Don’t Think It’s a Good Time to Buy
Surveys show the number of people who think it’s a good time to buy a home is near an all-time low. With tight supply, record-high prices, and expensive loans, it’s no wonder many are holding off.

Even as more listings pop up, the real estate market still has low inventory compared to historical norms — offering little relief.

3. A Slow, Weak Recovery in Home Sales
Existing home sales are projected to stay well below pre-pandemic levels, at around 4.3 million annually through 2027.

Meanwhile, prices aren’t expected to crash — only inch up 1% in 2025 and 2% in 2026 and 2027. That’s good news if you’re worried about losing equity, but tough if you’re waiting for a “steal.”

4. First-Time Buyers Are Especially Struggling
Last year, first-time buyer (FTB) purchases were half their normal levels, hitting just 1.1 million. With borrowing costs so high and no prior equity to tap into, it’s hardest on Gen Z and millennials trying to buy their first homes.

Even though mortgage payments as a share of income could drop slightly by 2026, the rebound in FTB activity will likely be modest.

Homebuilding: Margins Tight, Starts Slowing
Builders are trying to keep sales afloat by cutting prices and offering perks, but tariffs (like on lumber) are hurting profits. That means fewer new homes. Single-family housing starts are forecast to dip to 900,000 by end-2026 before slightly recovering.

On the flip side, price cuts mean buyers may find some deals on off market homes for sale or new builds if they look closely.

Rental Market: Demand Up, Supply Tightening
As buying gets tougher, more people are renting. For 25-34 year-olds, owning a starter home now costs over 50% of average income, compared to under 39% for renting.

This drives down vacancy rates, with apartments expected to drop to 5.4% by 2027. Rents are also rising — up 2% in 2025 and 3.5% in 2026 — meaning landlords are likely to do well.

Outlook: No Quick Fix for Housing Woes
Bottom line? The real estate housing market is set for a slow, grinding recovery.

No clear trigger exists to push prices down significantly.

Home sales will remain muted until either mortgage rates drop or incomes catch up.

Meanwhile, landlords stand to benefit as rents climb.

FAQs About the Real Estate Housing Market
What’s the current housing market like?
It’s a tough market — with high rates, tight inventory, and prices that aren’t falling much. The market value of my house or yours may keep edging up, just slower than before.

Are home prices going to drop?
Experts predict only small gains — about 1% in 2025 and 2% in 2026-27 — not a crash. The market value of my home is likely to hold or slowly increase.

Is now the best time to buy or sell?
If you find a home you love and it fits your budget, experts say buy — because trying to time the real estate market rarely works. And if you’re selling, it’s still a strong time to list. Use a home market value tool to see where you stand.

Should I consider renting instead?
With rising rents, it’s worth weighing buying vs. renting carefully. Owning helps you build equity, while renting gives more flexibility.

FAQs About Working with Johnny Rodriguez
Who are you and how can you help?
I’m Johnny Rodriguez, North Jersey’s First AI-Certified Realtor. I use smart tech to spot trends, uncover off market homes for sale, and help you navigate this market whether buying, selling, or investing.

What makes you different from other agents?
I’m also Probate Specialist and Short Sale Certified, so I handle tricky deals others might avoid. I blend cutting-edge tech with local know-how to protect your interests.

How do I get started?
📲 Shoot me an email at jrodriguez@roglegend.com or try my free Mortgage Calculator to see what you can afford. Then we’ll build a plan that fits you.

Final Take:
The real estate market in 2025 is tricky, with affordability still a huge challenge. But there are opportunities out there. Whether you’re looking to buy, sell, or just figure out the market value of my house, I’m here to help you move forward with confidence.

✅ Ready to talk?
Check out my featured listings, read client reviews, or shoot me a message anytime. Let’s find your next best move together.

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