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According to Moody’s Analytics economist Matthew Walsh, restoring 2019's housing affordability levels requires U.S. home prices to fall 40% or wages to rise 70%.

November data from Redfin shows median home sale prices reached $430,010, up 5.4% from 2023. Zillow reports typical home values at $357,469, marking a 2.5% annual increase.

Experts forecast continued price growth in 2025, albeit at a slower pace. Moody’s projects 1% to 1.5% appreciation as inventory expands. Redfin predicts a 4% rise, while Zillow anticipates 2.2% growth.

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“For the year ahead, we expect continued slowing in house prices,” Walsh told Newsweek in a housing market analysis. “A lot of that is due to continued low demand while inventories start to come back online, in what I think is really a continuation of the trends that have started in the second half of this year.”

Mortgage rates remain a key variable. Zillow senior economist Kara Ng expects rates above 6% throughout 2025. Redfin forecasts an average of 6.8% with weekly fluctuations.

Buyers "should be ready for a year with plenty of ups and downs with mortgage rates,” Ng said. “Both the Fed and markets will be in reaction mode as new data comes in.”

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The rental market offers better news for tenants. According to Redfin chief economist Daryl Fairweather, new apartment supply from pandemic-era construction should keep rents flat in 2025. Rising wages will improve rental affordability even as home purchases remain out of reach.

Homeowners who delayed selling amid high rates are now showing signs of listing their properties. Walsh notes that this trend coincides with new construction reaching the market, potentially helping “recalibrate the wages and bring the market a little bit closer back to balance.”

Home prices briefly dipped between late summer 2022 and spring 2023, creating temporary optimism among buyers. However, values quickly rebounded near pandemic peaks, pushing more first-time buyers toward rentals.