2025 Housing Market Forecast: What You Need to Know

by Laurie Dick

Big changes are coming to the housing market in 2025! Whether you're a homeowner, buyer, or renter, staying informed is key. Recent predictions from Zillow reveal some notable updates about home values, sales, mortgage rates, and rental prices. Here’s a quick breakdown of what’s ahead and what it could mean for you.

Home Values

Home values are expected to grow by 2.4% over the next 12 months and 2.2% for the full year of 2025. This modest growth reflects a stabilizing market. Limited inventory will remain a challenge, but some improvement in 2025 could help balance supply and demand.

Existing Home Sales

Existing home sales are forecasted to increase by 2.5%, reaching 4.16 million units in 2025. While this is slightly lower than earlier projections due to higher mortgage rates, improved inventory could support a small boost in sales.

Mortgage Rates

Mortgage rates are expected to fall moderately, offering a slight improvement in affordability. However, they won’t decrease as much as previously hoped, so affordability may remain challenging for many buyers.

Rental Market Trends

Higher mortgage rates are pushing more people toward renting, increasing demand:

Single-family rents are forecasted to rise by 4.1%.
Multifamily rents are expected to grow by 2.8%.

Both forecasts have been revised upward due to strong rental demand.

Key Takeaways

Buyers: More inventory means more options, but affordability planning is crucial.
Sellers: Modest price growth and increased sales activity make 2025 a great time to list.
Renters: Act sooner, as rental prices are projected to keep rising.

Let’s Chat!

Every market is unique, and if you're in the Twin Cities Metro area, let’s discuss how these trends impact your plans.

Stillwater and Hudson Local Stats:

New Listings (December 2024):
- Stillwater: 58 | Hudson: 19 | Total: 77 (down 39.84% YoY)
Average Prices (December 2024):
- Stillwater: $554,694 | Hudson: $537,578 | Total Avg: $546,136 (up 20.75% YoY)
Days to Sell (December 2024):
- Stillwater: 52 days | Hudson: 63 days