What’s Ahead for the Housing Market in the Second Half of 2025?
As we enter the second half of 2025, all eyes are on the housing market—and for good reason. The first half of the year brought a mix of stability and hesitation. Inventory remained tight in many areas, home prices continued to edge upward, and buyers and sellers alike waited for clearer economic signals. But now, a shift may be on the horizon.
Here’s what experts and industry trends suggest we can expect for the rest of 2025, including one key factor: an anticipated interest rate cut in September.
1. Interest Rates: Relief May Be on the Way
Perhaps the most talked-about projection in real estate circles is the likely interest rate reduction from the Federal Reserve in September. After holding rates high to curb inflation, recent data shows signs of cooling, prompting economists to forecast a rate cut that could open the floodgates for more buyer activity.
Why it matters:
A reduction in interest rates—even by just 0.25%—can significantly improve affordability for buyers. Lower monthly payments increase purchasing power and can motivate would-be homeowners who’ve been sitting on the sidelines.
What to expect:
Increased buyer demand starting in late Q3 or early Q4.
A potential uptick in home prices as demand increases, especially in areas with limited inventory.
Renewed activity among move-up buyers, who have been reluctant to trade their ultra-low pandemic-era mortgage rates.
2. Home Values: Modest Growth, Not a Bubble
Home prices are expected to continue their slow, steady climb in most regions. While we’re unlikely to see double-digit appreciation like in 2020–2021, demand remains strong enough to support ongoing value growth, especially in desirable neighborhoods and growing communities.
Sellers: Now may be your window. With values high and buyer activity poised to increase, listing your home in the second half of the year could help you capture top dollar before competition increases in 2026.
3. Inventory: Still Tight, but Improving Slightly
Many homeowners have been reluctant to sell because of the so-called "lock-in effect"—holding low mortgage rates while current rates remain higher. But as rates ease, we may see more listings hit the market, especially from downsizers and investors ready to reallocate capital.
That said, we’re not expecting a flood of new inventory. Supply will likely remain below historic norms, making the market favorable for sellers in many areas.
4. Buyer Trends: Flexibility, Affordability, and Suburbs Still Rule
Buyers are adapting. With home prices and mortgage rates still higher than pre-pandemic levels, flexibility is key. Many are:
Expanding their search radius to more affordable suburbs or smaller towns.
Looking for multi-generational homes or properties with rental potential.
Prioritizing move-in-ready homes over fixer-uppers due to high renovation costs.
5. What This Means for You
Whether you're considering buying, selling, or simply watching the market, now is the time to prepare.
Sellers: If you're thinking of making a move this year, listing ahead of the predicted fall surge could give you a competitive edge.
Buyers: Keep an eye on interest rate announcements. A small dip could make a big difference in what you can afford—and how quickly you’ll need to act when the right home hits the market.
Investors: With rents still strong and inventory limited, opportunities remain in single-family and small multifamily housing, particularly in high-growth regions.
Final Thought
The housing market in the second half of 2025 won’t be without its challenges—but there’s growing reason for optimism. With a likely interest rate cut in September and steady demand on the horizon, the next several months could offer renewed opportunity for both buyers and sellers.
If you're considering a move or want to know how changing market conditions affect your goals, let's connect. I'm here to help you make sense of the numbers and make confident real estate decisions.
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Debi Hauer | Real Estate Agent | eXp Realty | 541-220-8035
Your local expert, guiding you home.