Housing Market 2025: Where and When To Buy and Sell, According to Experts

Homebuyers and homeowners have been waiting on the sidelines of the U.S. housing market for years now, holding back for the right moment to buy and sell. Could this finally be 2025?

Experts think there's a chance both might get lucky next year—as long as they're in the right place at the right time.

Coming Out Of a 'Frozen' Year

This year has been something of "a tug of war" between supply and demand for the U.S. housing market, according to Moody's Analytics economist Matthew Walsh: aspiring homebuyers largely couldn't afford to buy properties because of high mortgage rates and high prices, driven up by stubbornly low inventory.

"I think broadly you can kind of characterize the housing market as being frozen over 2024," Walsh told Newsweek. "Demand remained mostly low, and its weakness is evident in the existing home sales data, which is kind of trending near recessionary low," he added.

Homebuyers and homeowners have been waiting for years now for the right moment to buy and sell. Experts think there's a chance both might get lucky next year—as long as they're in the right place...

"Existing home sales are largely where they were at the depths of the great financial crisis, mostly due to high interest rates," he continued. "On the supply side, inventories remain very low and that has kept a floor on house prices."

Home appreciation in the U.S., according to Moody's Analytics' data, was up 4 to 4.5 percent in 2024 compared to the previous year.

"That's largely due to two simultaneous reductions in supply and demand," Walsh explained. "It was largely similar to 2023 in terms of the dynamics of upward demand above supply, but I think that is shifting as we enter the final months [of the year], with more inventory coming online and a bit slower home price appreciation."

This trend that has manifested in the final year of 2024 is expected to continue next year, Walsh said, as he expects inventory to grow thanks to both homeowners having gotten accustomed to the high mortgage rate environment, and new construction finally reaching the market.

"That'll help bring the market a little bit closer back to balance while demand remains low," he said.

When It'll Be Time To Buy and Sell

According to Kara Ng, a senior economist at Zillow, the right time to buy or sell is likely to have a lot to do with mortgage rates.

"As we saw in September, when mortgage rates briefly fell to a two-year low, buyers are ready to return to the market when conditions are right," he told Newsweek.

"During those periods when rates are lower next year, expect more sales and refinance sprints," she said. "We could see a rush early in the year for a front-loaded home shopping season if buyers begin to suspect that mortgage rates will increase late in the spring or summer."

Other advice points towards the same time-frame - especially for certain U.S. regions.

"Typically, if sellers get their homes on the market before the spring home buying season, they will encounter the most buyers, but also face the most competition from other sellers," Redfin economist Chen Zhao told Newsweek.

"This applies for the whole country, but some markets will be more competitive than others for sellers. In general, markets in the Sun Belt, especially Florida and Texas, are the weakest at the moment."

For buyers, Zhao said, buying during the spring and summer "means the most selection, but buying during the off season means less competition from other buyers. That means potentially negotiating a better deal," she said.

"Buyers in the weaker Sun Belt markets such as Florida and Texas may be able to negotiate the best deal and have the most selection. In other markets, inventory will be lower and there will be less room to negotiate."

In its outlook for 2025, Redfin experts said it expects there to be more sales in 2025 compared to this year, though it will mostly be due to pent-up demand and homebuyers will remain largely priced out because of high prices and high mortgages.

"We expect existing home sales to tick up next year, ending 2025 at an annualized rate of between 4.1 million and 4.4 million," Redfin's chief economist Daryl Fairweather and Zhao wrote. "That represents a year-over-year increase of between 2 percent and 9 percent. We're presenting an unusually wide sales range this year because while high housing costs may price out some would-be buyers, there's also a fair amount of pent-up demand in the market."

Where To Buy

Ng thinks it likely that we will see more homes on the market next year, especially in Sun Belt markets "where it is easier to build, and homes are more affordable than on the coasts," she said. "That means buyers should have more time to consider their options and more negotiating power."

Staying with the Sun Belt, Walsh thinks that Florida will be an interesting market to watch next year. "There's certainly a lot of risk in Florida both in terms of overvaluation and the state's insurance markets," he said.

"Home prices there have risen very quickly and have kind of exceeded the pace we would expect home prices to grow at given economic fundamentals in the state for that income growth and household formation," Walsh explained. "And that disconnect really does weigh on prices when demand starts to cool."

This could translate in a home price appreciation well below the national average and, in some markets in Florida, even price declines.

The Sunshine State is also going through an insurance crisis that has seen homeowner insurance premiums surge faster than in most of the country, and this added cost, Walsh said, "will weigh on certain markets"—especially the state's coastal metros. "We are seeing some of that in the home price appreciation data today," he added.

The Moody's Analytics' economist is also expecting home appreciation to be slower than the national average in the West.

"Places like Arizona, Idaho, and some markets in Texas, where there was a lot of building and there was a very quick home price appreciation after the pandemic which led to this overvaluation," Walsh said.

"We would expect to see some greater slowing there or home price declines, depending on the market. I think Boise [Idaho] is one that sticks out as a place that is at risk of home price declines just because of overvaluation for next year," he added.

Where To Sell

Moody's Analytics experts expect the Northeast and California to overperform the U.S. average next year, even though home prices will continue to grow in all states in this area next year.

"The Northeast and California both have seen some modest increases in inventory. If you look at the existing inventory coming online, it's still much further below kind of its pre-pandemic average than elsewhere, and you have very slow building in these places," Walsh said.

In Pennsylvania, where Walsh is based, there has been very little new construction recently. "Pennsylvania is a place where a lot of builders are responding to weaker demographic trends here by not expanding the housing stock," he said.

"That's unlike Florida, where builders have gone out and pulled a lot of permits and started a lot of properties because they anticipate stronger demographic trends that are supportive of greater transactions," he added.

"So given that kind of slower increase in home construction in places like Pennsylvania, New York, Connecticut, or California, that supply should be supportive of stronger home price appreciation," he said.