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Zillow predicts the US housing market will keep shifting in 2025.
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The real-estate firm says the average home value rose by 2.6% annually in October.
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It says homebuying activity should pick up after a long slump, despite choppiness in mortgage rates.
Between stubbornly high mortgage rates and elevated prices, homebuyers had a tough time navigating the housing market in 2024. And Zillow says more changes could be coming next year.
In a recent outlook, the real-estate-listings site forecast a handful of developments for next year's housing market, which it described as still normalizing after the COVID-19 pandemic.
There are signs that demand and inventory of existing homes are rising. The National Association of Realtors said existing-home sales rose by 2.9% year over year in October, the first annual increase in three years.
The average home value, meanwhile, climbed to $359,099 in October, up by 2.6% annually, Zillow said. And per Freddie Mac, the rate on the 30-year fixed mortgage edged up to 6.84% last week.
"Zillow predicts a more active housing market and more buyers gaining the upper hand in 2025, but those hoping to buy — or even refinance — should buckle up for a bumpy ride and stay ready to move when conditions are right," Skylar Olsen, Zillow's chief economist, wrote in a note.
Here are four predictions Zillow has for next year's market.
1. Rising home sales
Olsen said the housing market was slowly becoming "unstuck," a trend that should continue as home prices rise at a "modest" pace.
The firm predicts that home prices will rise by 2.6% in 2025, while existing-home sales will notch 4.3 million, up from the 4 million sales it expects this year.
"While affordability challenges will remain, buyers should expect more homes on the market, meaning more time to consider their options and more leverage in negotiations," Olsen said.
2. Choppy mortgage rates
Zillow predicted that mortgage rates would bounce throughout next year.
The firm pointed to recent changes in the 30-year fixed mortgage rate, which fell this year before climbing to nearly 7% as markets adjusted their expectations for borrowing costs amid sticky inflation and a robust economy.
"More swings like this are expected in 2025, with refinancing sprints occurring during the dips," Olsen said.
3. A buyer's market in the Southwest
Zillow's data indicates most "buyer's markets" in the US are in the Southeast. But it said buyers could find more opportunities in the Southwest next year as more inventory in the region becomes "unstuck" and attracts homebuyers.