Key trends in mortgage rates, home prices and buyer demand to help you determine if 2025 is the right year to sell your home.

The housing market has been a rollercoaster for both buyers and sellers. Throughout most of 2024 and the first quarter of 2025, mortgage rates remained near 7%.

However, in April, amid heightened economic tensions, rates rose to an average of 7.22% for a 30-year fixed-rate mortgage and 6.47% for a 15-year fixed-rate mortgage, according to Freddie Mac.

At its May meeting, the Federal Reserve held the federal funds rate steady at 4.25% to 4.5%, a key benchmark that influences borrowing costs across the economy. While the Fed doesn’t directly set mortgage rates, its policies indirectly impact lender borrowing costs, which in turn influence mortgage interest rates.

Mortgage rates often adjust in anticipation, shaping the affordability landscape for homebuyers and those looking to refinance. This delicate balance between rate stability and market conditions continues to shape homebuying.

While inventory levels have improved, they remain below what’s needed for a balanced market. With economic uncertainty and the potential impact of President Trump’s trade policies and tariffs, many homeowners are asking: Will 2025 be a good year to sell? Here’s what to expect.

Mortgage rates: Gradual improvements expected

Interest rates remain higher than the ultra-low levels seen during the COVID-19 pandemic. While the Fed decided to keep rates steady, they have hinted at potential federal funds rate cuts later in 2025 — a promising sign for sellers, as lower rates could bring more buyers back into the market.

Though rates are unlikely to return to the historic lows of 2021, they are moving closer to historical norms. Even a small decrease in mortgage interest rates could encourage buyers to enter the market, creating more opportunities for sellers. To find current mortgage rates, see our story on the best 30-year mortgage rates.

For homeowners considering selling, lower mortgage rates could ignite buyer interest and boost demand. As borrowing costs decrease, more first-time buyers may feel confident entering the market, potentially accelerating sales and contributing to improved market conditions.

You may compare current mortgage interest rates at https://www.bankrate.com/mortgages/mortgage-rates/.

Housing inventory levels: Still tight but improving

Home sales fell 5.9% in March, with year-over-year sales declining by 2.4%, according to the National Association of Realtors (NAR).

Home prices continued their upward trend, with the median home sales price rising 2.7% to $403,700 — all four regions of the U.S. recorded price increases.

Meanwhile, housing inventory saw a boost, increasing 8.1% from the previous month to 1.33 million available homes, representing 4.0 months’ supply at the current sales pace. While this uptick signals progress, it still falls short of the 5 to 6-month supply typically needed for a balanced market.

On the new construction front, homebuilders had been growing more optimistic as reduced financing costs boosted confidence and raised hopes for increased housing supply in 2025. However, the Trump administration’s 25% tariffs on steel and aluminum imports have added uncertainty to new construction plans. Rising material costs could slow development, potentially limiting efforts to expand the housing supply in the coming year.

For sellers, improved inventory may mean more competition but demand continues to outpace supply in many regions. Well-priced, well-maintained homes will likely attract strong interest, especially in high-demand areas with limited inventory.

However, sellers should be prepared for a real estate market that is gradually shifting toward balance, where buyers may have more options and negotiating power than in recent years.

Buyer demographics will shape the housing market in 2025

Buyer demographics are set to play an important role in shaping housing demands in 2025. Millennials, now in their prime homebuying years, continue to dominate the market, often looking for larger homes to accommodate growing families.

Meanwhile, Gen Z is stepping into the market as first-time buyers, and they’re looking for affordable properties and locations that support the remote work lifestyle.

In addition, multigenerational living is on the rise, with families pooling resources to navigate high housing costs. This trend is driving demand for homes with extra space, such as properties with in-law suites.

For sellers, tailoring marketing strategies to highlight features that resonate with these groups can be an effective way to maximize interest and secure the best possible sale price.

Home prices: Slower growth expected in 2025

In March, existing-home sales declined across all regions. The West saw the largest decrease, dropping 9.4% from February, with the median home price rising 2.6% year-over-year to $621,200.

The Midwest experienced a 5.0% decrease in sales, down 3.1% from the previous year, with a median home price of $302,100, up 3.5% annually. In the Northeast, sales declined more modestly by 2.0%, while the median price increased 7.7% from the previous year, reaching $468,000.

According to Realtor.com’s housing market predictions, cities such as Charlotte, Denver and Miami are expected to lead in price growth. Markets like Baltimore and Des Moines, which have seen inventory gains, may experience more balanced market conditions or slight price dips.

For sellers, this means that while home values are still appreciating, the rapid price gains of recent years are slowing. Knowing how to price your home when selling and understanding local market conditions will be essential to attracting buyers in 2025.

Working with experienced real estate professionals can help sellers navigate these regional differences and position their homes competitively.

Political and economic factors in the housing market

The 2025 housing market will be heavily influenced by broader economic conditions. Job growth, inflation trends and the Federal Reserve’s monetary policy will shape whether the market becomes more favorable for buyers and sellers.

On the political side, it’s still too early to tell how tariffs will impact the real estate market. While higher material costs could slow new construction, the broader effects on affordability and supply remain uncertain.

A new administration’s policies can directly impact housing. Changes to tax laws, mortgage regulations or incentives for homebuilders might affect affordability and supply.

For example, measures to increase affordable housing or ease zoning restrictions could help address inventory shortages. At the same time, infrastructure investments might drive demand in certain regions, creating localized market shifts.

Should you sell your house in 2025?

Rising buyer demand could create great opportunities for sellers who’ve been waiting for the right time to list their homes for sale. While property values are expected to grow slowly this year, there’s still potential for gains, making 2025 a promising year for many sellers.

Affordability challenges and economic uncertainty might still pose hurdles for sellers in the new year. However, it’s essential to remember that the best time to sell your house is when you’re ready — both financially and emotionally.

Source:  https://www.kiplinger.com/real-estate/will-2025-be-a-good-year-to-sell-your-house

By Carla Ayers