The U.S. housing market has been on a tirade since the pandemic, and the market in 2024 was defined by high mortgage rates, peak property values, and inventory lagging behind demand. According to data from J.P. Morgan, Statista, Zillow, and other authorities, 2025 real estate statistics suggest the market will be shaped by shifting demand and buyer preferences. We pulled together our own expert insights and real estate market data to forecast where the market is headed in 2025, including home prices, inventory levels, rental statistics, and more.
Key Findings:
The U.S. residential real estate market was valued at $106.7 trillion in 2024, with a 48.8% increase since 2019, and it’s projected to grow 19.4% by 2029.
Housing affordability has declined, as new home prices have increased by 49% (approximately $140,000) on average since the pandemic.
Home prices decreased in the District of Columbia, Florida, and Vermont in 2025.
New Jersey, Rhode Island, and New York had the biggest one-year price jump, with increases above 6.9%.
Housing inventory declined 4.84% in the past year, with 73,000 homes delisted in December 2024 due to a lack of buyers.
Cape Coral, FL, is the top buyers’ market, while Rochester, NY, leads as the top sellers’ market.
When selling a home, 85% of experts say soft whites add the most home value, while lime green is the most off-putting color for buyers.
Residential Real Estate Market Value
Residential real estate market value has been steadily increasing since 2019, with every year bringing higher value than the last except 2023. Value dipped in late 2022 and 2023 as homebuyers rushed to stay ahead of climbing mortgage rates¹, but they quickly climbed again in 2024 to historical highs. Housing market data suggest that value will continue to rise in 2025 to new highs, and that trend is expected to persist through 2029 despite a decline in affordability.
From 2019 to 2024, the residential real estate market grew by 48.8%. According to Statista², the market is projected to hit a ten-year high of $110.8 trillion in 2025. The upward movement of the market could end up being more significant if mortgage prices come back down, as analysts have been predicting for some time now.
The market data in 2025 support continued value growth through 2029, representing a 19.4% bump over the next four years.
Keep in mind that these are national numbers, and value swings will vary widely across individual markets. While the national value of real estate increased by 4% in 2024, values are expected to climb at even steeper rates in particularly hot markets, which, according to Zillow²², include the following cities:
*As of January 2025
Home Prices and Sales
All markets are driven by supply and demand, so there’s much insight to be gained from looking at home prices and inventory fluctuations.
The pandemic caused property values to spike in 2020 for a few reasons, including the lowest 30-year fixed mortgage rates the country has ever seen and sudden competition in suburban areas as people sought to move away from more congested areas. After that growth, the market stabilized a bit in 2022 and 2023, when mortgage rates began to rise again. Home prices across the country saw just a modest increase in 2024.
According to Zillow³, the national average home value in 2025 is $355,328, a 2.7% increase from last year. Of course, the average price varies by state. The highest values in the country are in Hawaii, with an average sale price of $967,396. The lowest values are in West Virginia, with an average sale price of just $163,193.
In 2025, home prices increased in nearly all states, with the largest jumps over 6.9% seen in New Jersey, Rhode Island, New York, and West Virginia. However, the District of Columbia (-2.08%), Florida (-0.79%), and Vermont (-0.07%) experienced price declines.
Housing affordability goes hand-in-hand with pricing and mortgage rates. As prices increase and interest rates climb, affordability declines. Since 2020, the number of households unable to afford a median-priced home has gone up by a staggering 134%, in large part because the median sale price has increased by 49% since 2020. New Hampshire, Montana, and Maine all saw home prices increase by over 60% over the past five years.
J.P. Morgan Research⁴ projects that house prices will continue to climb by 3% in 2025. Although the market has become more balanced since 2020, we’re still solidly in a seller’s market, which means property values are likely to continue to climb as competition for homes remains fierce.
There are local factors that play a role in housing affordability, too. Olivia Barrett, a realtor with Guide Real Estate in California, mentioned that increasing homeowner’s insurance premiums are affecting affordability alongside home values.
“One of the biggest impacts we are seeing to our industry recently is insurance,” said Barrett. “The cost of insurance and the increase in policy requirements, fire insurance being the biggest contributor, and whether the property is required to be covered by the CA Fair Plan.”
We’re seeing similar changes in Florida, where large insurance providers have been denying claims in the wake of hurricanes and tropical storms, and some providers are declining to insure homes altogether. Premiums have also been increasing across all states, reducing housing affordability nationwide. According to the National Bureau of Economic Research (NBER), premiums have gone up a staggering 30% since 2020.
Sale Inventory Levels
Inventory and existing home sales are at near-20-year lows, so buyers are still seeing loads of competition for the minimal inventory that is available. According to Zillow, homes in the U.S. are listed for just 34 days³ before they get an accepted offer. For comparison, that’s about half of the 5-year average of 60 days⁵. With homes moving to “under contract” so quickly, it’s no surprise that national housing availability is still sitting well below where it was pre-pandemic.
Housing inventory is a major driver of home values. As inventory declines, there are more buyers to compete for each property, and that increased demand causes prices to rise as buyers try to beat each other out for homes.
Since January 2020, we saw the lowest inventory in February 2022, when the available inventory was 139.35% lower compared to the beginning of 2025. While the supply has rebounded since then, the active listing count is still 4.84% lower than it was a year ago and 12.85% lower than it was 5 years ago.
In November 2024, housing inventory reached its highest level in recent years, and in December, 73,000 homes were delisted after failing to attract buyers⁶. That’s a 64% increase from December 2023. Nine states⁷ in total have returned to or surpassed their pre-pandemic active inventory levels, which also suggests a gradual move toward a buyer’s market⁴. Those states include Arizona, Colorado, Florida, Idaho, Oklahoma, Tennessee, Texas, Utah, and Washington.
It’s always challenging to parse these kinds of statistics, but these numbers all point to the market finally turning around.
Barrett had some interesting insights to back up this change in the market. “We saw some hesitation in the market after the rates increased dramatically, causing buyers to hold off on buying until the rates went back down,” said Barrett. “However, we have recently seen a fatigue in waiting…and have experienced those buyers re-enter the market with the hopes to have the opportunity to refinance in the future.”
This could be why we’re seeing some movement toward a seller’s market despite mortgage prices sitting well above the average over the past few decades.
Buyers vs. Sellers Markets Across the U.S.
Knowing whether it’s a buyer’s or seller’s market is helpful for getting rough estimations of property availability and prices in the near future because the distinction reflects how supply and demand are interplaying.
In a buyer’s market, there’s more inventory than there are buyers, meaning buyers have their pick of multiple properties. This represents lower competition, and homes tend to sit on the market for longer. Usually, this causes sellers to drop prices to entice buyers to choose their homes.
In a seller’s market, the number of active buyers outpaces the inventory, which means there’s more competition for each home. More competition means buyers need to offer more money to secure housing, which drives up the cost of homes.
Housing market conditions vary across metro areas. Some remain seller’s markets with high demand and rising prices, while others have shifted to buyer’s markets with longer time on the market and slowing price growth. Many areas fall somewhere in between, maintaining a more balanced, neutral market. Having a general idea of where a specific market currently stands is always helpful for making informed decisions about relocating.
Here are the current top five hottest seller’s markets in the U.S.⁸:
Rochester, NY
San Jose, CA
San Francisco, CA
Hartford, CT
Syracuse, NY
The likelihood is that prices in these cities will continue to increase at a rate that outpaces national averages. On the other end of the spectrum are the hottest buyer’s markets, where housing inventory abounds, and prices are likely to sit below national average increases:
Cape Coral, FL
McAllen, TX
Miami, FL
Scranton, PA
New Orleans, LA
Renting vs. Buying: When Does Homeownership Pay Off?
As you might expect, housing prices, inflation, and mortgage rates all directly affect the rental market, too. As homes become less affordable due to increases in any or all of these factors, more people turn to rentals, which come with lower upfront costs. In some states, renting remains more affordable than buying over the entire 30-year mortgage term, while in others, buying becomes more cost-effective after just a few years.
We calculated the total average expenses for buying and renting options to see if buying is a more affordable option in the long run, and where that tipping point is. Based on our data, renting is always more affordable at the end of the 30-year period of a mortgage in South Dakota and Hawaii.
Elsewhere in the country, buying becomes the more affordable long-term option in an average of 4 years, but the actual tipping point varies by location. You’ll see lower total costs after just 2 to 3 years in 28 states, but it takes 10 to 15 years for buying to become more affordable in others, including California, Colorado, Oregon, North Dakota, and Washington.
Unfortunately, buying usually comes with higher upfront costs, as you’ll need to pay closing costs and put a large sum of money down. Down payments are a percentage of the sale price, so as home values increase, the affordability of down payments decreases, meaning buying isn’t always possible, even if it’s more beneficial. According to the National Association of Realtors (NAR)⁹, only 29.7% of Millennial renters can afford to buy right now.
Expert Insights on Real Estate Trends for 2025
2025 is shaping up to be a dynamic year for real estate, with technology, sustainability, and changing work habits all playing a major role in shaping buyer preferences.
Predicting real estate values and trends is always tricky, but looking back at historical data can help create a more accurate approach to future market movement.
Homebuyer Migration Trends
According to Joy Aumann, a licensed realtor (CIPS), interior designer, and founder of LUXURYSOCALREALTY.com, one trend that has continued since the pandemic in 2020 is a migration away from major cities and into suburban areas.
“Over the past 12 to 18 months, I’ve noticed a strong shift toward suburban living,” Aumann said. “Remote work has allowed buyers to prioritize space and affordability over proximity to city centers. Many are moving to areas where they can have larger homes, access to outdoor activities, and a better quality of life without sacrificing career opportunities.
I see a growing demand for suburban areas. Remote work has changed how people think about where they live. Many who once wanted to be in the city are now looking for more space, bigger yards, and quieter surroundings.”
People moving away from larger cities for hybrid and work-from-home roles won’t necessarily lead to an exodus as we saw in 2020, but it should cause demand and values to dip in major cities and increase in the surrounding areas.
Housing Preferences
Another interesting trend we’re seeing that we expect to continue throughout 2025 is a move toward more affordable housing options. Single-family existing home sales (not including new construction) are up 20% year-over-year, according to J.P. Morgan⁴. These have long been the most popular option, but we expect a gradual movement toward townhouses and condos, as they offer a mix of affordability and space.
“Townhouses and condos are also seeing steady demand, especially in urban markets where affordability is a key factor,” said Wade. “Many buyers are balancing lifestyle preferences with budget constraints, leading to increased interest in smaller but well-located properties.
“At the same time, there’s growing interest in co-living spaces, especially among younger buyers. These arrangements offer affordability, shared amenities, and a built-in sense of community, making them particularly appealing in high-cost urban areas.”
Condos and co-ops are very often more affordable than single-family homes, but affordability isn’t everything. These housing options bring some potential complications, like overbearing homeowner’s associations and expensive monthly HOA fees.
“Condos still attract buyers looking for a low-maintenance lifestyle, but I always tell my clients to think long-term,” said Aumann.
Home Design Trends
It’s tough to talk about real estate trends without discussing home design trends, too, as the two very often go hand-in-hand. Keeping up with design trends lets sellers maximize the appeal of their homes, which tends to drive prices higher and reduce time-on-market.
According to a recent survey with interior designers, 85% agree that soft or warm whites in the main living area are some of the leading design trends in 2025 and will add the most value to a home, especially for the relatively low cost of painting. While you’re at it, paint your main bedroom a warm, neutral color, which 76% of experts agree is trending in 2025.
If you’re not a fan of basic and neutral, you can still customize your home interior color palette to suit your preferences. However, you may want to stay away from lime green, which 73% of experts agree is the most off-putting interior color for homebuyers. Either choose something more widely accepted or plan to repaint before you list.
Painting the exterior of your home has a major impact on curb appeal and home value, so choosing the right colors outside can maximize profits when selling your home. Just under half of design experts agreed that off-white siding is going to be the most trendy in 2025, so that could be a good way to maximize value.
You also can’t go wrong when upgrading your home with smart features, which are currently trending and are expected to become more in demand throughout 2025.
“I see that smart home technology is becoming non-negotiables for many buyers,” said Aumann. “I recently worked with a buyer who loved a home but walked away because it lacked smart security, EV charging, and automated lighting. Homes without these features are starting to feel outdated, and sellers who don’t adapt are losing buyers.”
Wade noted that “more buyers are looking for homes with integrated AI-powered appliances, automated security systems, and energy-efficient smart systems.” If you’re thinking of selling your home in the near future, consider prioritizing upgrades like these to maximize your sale price.
With growing concerns over global warming and climate change, it should come as no surprise that sustainability is another trend buyers are looking for in 2025.
“Buyers are prioritizing eco-friendly homes with energy-efficient designs, solar panels, and sustainable building materials,” said Wade. “This isn’t just a niche preference anymore—it’s becoming a mainstream expectation as people look for homes that align with a greener lifestyle.“
Aumann agreed. “More buyers are prioritizing energy-efficient features like solar panels, high-performance insulation, and smart home automation. It’s not just about cutting costs—it’s about long-term value and convenience.”
Methodology: Graphics
To analyze the residential real estate market, we took data on estimated market values and projected values between 2019 and 2029 from Statista². We then calculated the percentage changes over the past 5 years and determined the predicted percentage change moving forward.
To determine home prices by state, we compared sale data from Zillow¹⁰ from 2024 through January 2025 and calculated the percent change year-over-year.
For the sale inventory levels, we used data from FRED¹¹ and compared one-year and five-year changes in available inventory.
To find out whether buying or renting is the more cost-effective option over time, we collected data for each state. To get a real cost of renting, we included monthly rental averages from Zillow¹², monthly renters insurance costs from NerdWallet¹³, and the latest yearly rent increase percentage from iPropertyManagement¹⁴. We also assumed a one-month security deposit for renters. For homeownership costs, we gathered data on current average home prices from Zillow¹⁰, average 30-year fixed mortgage rates from Investopedia¹⁵, and average down payment by state from NerdWallet¹⁶. Additionally, we included closing costs from Bankrate¹⁷, property tax rates from the Tax Foundation¹⁸, home insurance costs from NerdWallet¹⁹, and home appreciation rate data from the National Association of Home Builders²⁰. We also assumed 1.5% of the home’s value for annual repair and maintenance expenses. Finally, we analyzed the data using NerdWallet’s Rent vs. Buy calculator²¹ to determine how many years you need to live in a home for buying to become the more cost-effective option for a 30-year period. A marginal tax rate of 22% and a general inflation rate of 3% were also factored into our analysis. Note: We used the latest available yearly rent increase and home appreciation rates but did not make predictions about future changes in these rates.
Sources
1. https://fred.stlouisfed.org/graph/?g=1Dxyz
2. https://www.statista.com/outlook/fmo/real-estate/united-states
3. https://www.zillow.com/home-values/102001/united-states/
4. https://www.jpmorgan.com/insights/global-research/real-estate/us-housing-market-outlook
5. https://fred.stlouisfed.org/series/MEDDAYONMARUS
6. https://www.wsj.com/economy/housing/housing-market-delisting-home-sales-1afd45aa
8. https://www.zillow.com/research/market-heat-index-34054/
10. https://www.zillow.com/research/data/
11. https://fred.stlouisfed.org/series/ACTLISCOUUS
12. https://www.zillow.com/rental-manager/market-trends
13. https://www.nerdwallet.com/article/insurance/average-homeowners-insurance-cost
14. https://ipropertymanagement.com/research/average-rent-increase-per-year
15. https://www.investopedia.com/terms/d/down_payment.asp
16. https://www.nerdwallet.com/article/mortgages/average-down-payment-on-a-house
17. https://www.bankrate.com/real-estate/average-closing-costs-by-state/#cost-by-state
18. https://taxfoundation.org/data/all/state/property-taxes-by-state-county/
19. https://www.nerdwallet.com/calculator/rent-vs-buy-calculator
21. https://www.nerdwallet.com/calculator/rent-vs-buy-calculator