Will Home Prices Drop or Rise in 2025?

Anne Hale
Jul 2, 2025
2 min read

Home prices across the U.S. are entering a more balanced seasonal cycle in 2025—but regional trends may diverge. Here’s what you need to know:

1. National Forecast: Flat or Slightly Down

Zillow now expects a 1.7% decline in U.S. home prices from March 2025 to March 2026, driven by rising inventory and affordability constraints forbes.com +1constructelements.com +1resiclubanalytics.com.
Redfin forecasts a 1% drop by the end of 2025, as sales slow and listings multiply redfin.com.
Conversely, Fannie Mae, NAR, and MBA predict modest growth (1–4%), assuming mortgage rates remain elevated near 6.5–7% resiclubanalytics.com +15ramseysolutions.com +15timesunion.com +15.

2. Regional Differences: Winners & Losers

Strong rises expected in mid-tier markets—like parts of the Northeast and Midwest—where supply is lower and demand remains steady barrons.com +1redfin.com +1.
Declines in expensive metros: Coastal and Sunbelt markets facing high rates and rising supply may see sharper drops ramseysolutions.com +14resiclubanalytics.com +14constructelements.com +14.
- Notably, Zillow predicts declines of ~7–10% in places like New Orleans, Houma, and Lake Charles resiclubanalytics.com +1youtube.com +1.

3. What’s Driving These Shifts?

Rising inventory: Listings are up 31.5% year-over-year (May 2025), reducing buyer competition realtor.com.
Mortgage rates: Holding around 6.5–7%, delaying rate-sensitive buyers .
Buyer hesitancy: First-timers are sidelined—just 24% of buyers in mid-2025, down from 50% in 2010 businessinsider.com.
Rise of cash buyers: In luxury markets like Manhattan, cash deals account for 69% of purchases, supporting high-end price resilience nypost.com.

What This Means for You

Role	Strategy
Buyer	Look to value markets (Midwest, parts of Northeast); get pre-approved; be patient—prices might dip further.
Seller	Price competitively in cooling metros; upsize staging and incentives. In strong regions, sellers still hold some leverage.
Investor	Consider underpriced markets or mid-tier metros where long-term growth potential remains strong.

Final Take

2025 is shaping up as a balanced market—flat or slightly declining nationally, but with regional variation. Mid-tier regions could still see modest gains, while overheated metros may experience corrections. Affordability (or the lack thereof) and interest rates will be key drivers of any movement.

Curious about your neighborhood? I can pull hyper-local data and projections to help you make the right move, whether you’re buying, selling, or investing.