The spring months bring peak housing market activity, and we are starting to see some shifts for buyers and sellers in the 2025 housing market.
High home prices and mortgage rates are still slowing sales, while tariffs and economic uncertainty could drive prices up further in the coming months.
That being said, we have started to see a small but noticeable decrease in the growth of home prices and mortgage rates.
2025 Housing Market: Decrease in Home Price Growth
While the prices of homes on the market continue to increase, they are doing so at a slower pace than previous years. Experts expect that deceleration to continue as inventory increases.
We’ve also seen a slight increase in overall home affordability, according to the National Association of Realtors. (The affordability index measures whether or not a typical family could qualify for a mortgage loan on an average home.)
This means that, while prices are still considered high, homes might be slightly more affordable than they were over the past few years.
New Home Construction
If you’re planning to build a home, keep in mind that most builders don’t guarantee construction costs; there are too many variables that can affect prices. For example, the cost of materials can go up and catch you off guard.
Most construction loans are variable, though there are some lenders who will let you lock in a construction loan rate and convert it into a permanent mortgage once construction is complete. Be sure to ask for the fine print and know what you’re getting into.
Tariffs, Markets and What’s Next for Home Prices
There is still quite a bit of uncertainty around Trump’s tariffs, but we do know that they might increase housing costs with more expensive construction materials and potentially higher mortgage rates.
While affordability may be improving, the high uncertainty around the markets, economy and prices going forward still makes it a challenging year for both buyers and sellers. If you don’t have to buy or sell a home right now, it could be worth waiting to see how the year unfolds before making a decision.
Buying or Selling a House in 2025
If you will be buying or selling a home this year, preparation is key.
Be very clear on exactly what you want, and where you can be flexible. This goes for your must-haves in a new house, as well as what you are comfortable negotiating in the sale of your current home.
You should also be very aware of the implications for your finances. For example, if you are buying a house at a certain price point, make sure you have also considered the possibility of expenses going up, or the cost of a higher mortgage rate.
Here are some additional resources to help you if you’re buying or selling this year:
How Much House Can You Afford?
What to Consider Before You Upsize Your Home
Home Renovations: Which Projects are Worth the Investment?
About Your Richest Life
At Your Richest Life, Katie Brewer, CFP®, believes you too should have access to financial resources and fee-only financial planning. For more information on the services offered, contact Katie today.