Thinking about entering the real estate market in 2025? In today’s post, the top minds at Allen Tate come together to predict what will happen in 2025. While no one has a crystal ball, and we are not economists, our predictions are fairly in line with those of other national real estate publications, so we feel confident this article will paint an educated estimation of what you can expect in the 2025 real estate market.
Interest Rates
All signs pointed to lower interest rates heading into 2024. However, things didn’t exactly play out as we expected, and interest rates remained fairly stubborn much of the year. The top minds at Allen Tate echo most economists predictions and anticipate rates in the mid-sixes at the beginning of the year, and ending the year a bit lower, around 6.25%.
Given the continued home appreciation rates in the Carolinas, it does not make financial sense to continue to wait for “the right time to buy,” and we predict more would-be buyers will get off the sidelines and enter the real estate market in 2025.
Let’s see exactly what our team of experts predicts for 2025 on the mortgage interest rate front:
- Mark McGoldrick, EVP, Howard Hanna Mortgage, predicts mortgage rates will be between 6.25-6.5%
- Neal Hanks, President, Allen Tate/Beverly-Hanks, predicts mortgage rates will be around 6.5%
- Phyllis Brookshire, SVP, Operations, Allen Tate Realtors, predicts mortgage rates will be in the 6% range
- Eric Heintschel, Chief Financial Officer, Allen Tate Company, predicts we’ll see interest rates between 6 and 6.5 the first half of the year and 5.75-6.25% in the final half of 2025.
- Gary Scott, President, Allen Tate Companies, predicts mortgage interest rates will be in the low 6% range
Inventory
Experts predict we’ll see the highest for-sale inventory since December of 2019, a welcome relief, especially for first-time buyers. If you’re buying in 2025, you can expect to experience a slower-paced market that’s far less competitive than we’ve experienced in a while.
Here’s what our experts had to share on the topic of inventory:
Mark McGoldrick: Inventory will go up. We’ll see it increase early in the year when interest rates go down, and later in the year, we would expect that inventory would increase even more as interest rates continue trending downward.
Neal Hanks: Days on market have been increasing as well as months supply of inventory (MSI)* this year and I think we’ll continue to see that in 2025. Babyboomers will downsize and buyers that have been sitting on the sidelines for a couple of years will finally enter the market. I expect MSI nationally to be over 4, and locally in the 3s.
Phyllis Brookshire: MSI increases from 2’s to low 3’s. In 2025, we’ll see DOM increase and MSI will follow that. Sellers that have been sitting on the sidelines for the last couple of years will likely price their home like it should have been priced 2 years ago (when inventory was significantly more scare), and as a result, their homes will sit on the market longer.
Eric Heintschel: Inventory will build, but that tops out in the spring; locally in the Carolinas we will see an MSI of 3.3 and nationally we’ll see 4.
*Anything below five months of supply (MSI) is a sellers’ market, anything from five to seven months is a balanced market, and anything over seven months becomes a buyers market.
Price appreciation
Nationally, price appreciation is expected to grow at a smaller rate than years prior. This will be largely due to the increase in inventory predicted, thanks to falling mortgage rates. However, house appreciation rates continue to be hyper-local, and in the Carolinas, we will likely experience a higher appreciation rate as our area continues to be a very desirable spot to live.
Here’s what our experts are predicting in terms of home price appreciation for 2025:
- Phyllis Brookshire: Nationally, we’ll see 5-6% appreciation. Locally, the range could be 3-10% depending on where in the Carolinas you are located.
- Neal Hanks: Nationally 3%, Carolinas 5-5.5%
- Gary Scott: Nationally flat, Carolinas 6-8%
- Eric Heintschel: Nationally 3%, Carolinas 5-5.5%
- Mark McGoldrick: Nationally 2-3%, Carolinas 5-6%
Inflation
Inflation continues to trend downward, but there are some doubts as to where it could go in 2025, particularly in the latter half of the year, as new economic policies take place as a result of the new administration.
Here’s what our experts are predicting with inflation in the new year:
Neal Hanks: Inflation is coming down and will hopefully end the year in the 2.2-2.5% range.
Mark McGoldrick: Real estate, rents, and insurance are where we saw most of the inflation increases in 2024. In 2025, those elements should be pretty under control. I don’t know that we will be getting to 2% without different news on the job front. I think we’ll see between 2.25-2.4%.
Eric Heintschel: Inflation measures a reflection of policies and things that have happened in the 6-9 months prior. We will continue to see inflation trend down closer to the target. Due to the potential tarrifs and immigration policy, I believe it will trend down in the first half of 2025, but cautious about how it could potentially move back up in the second half of the year.
Phyllis Brookshire: We’ll see low 2’s- up to the 4’s due to factors Eric mentioned.
Now that you have a good idea of what’s in store for the real estate market in 2025, if you’re in the market to buy or sell this year, let the experts at Allen Tate be your guide! Thinking about selling? Get a jump start with a free home physical.
_____________________________________
Allen Tate is the Carolinas’ largest real estate company, with more than 70 offices and 1,800 Realtors in the Charlotte, Triad, Triangle, High Country, Upstate SC, Highlands/Cashiers and Asheville/Mountain regions. Allen Tate is a partner of Howard Hanna Real Estate, the largest privately held real estate broker in the U.S., with 500 real estate, mortgage, insurance, title, and escrow service offices and 15,000 sales associates and staff across 13 states. For more information, visit www.allentate.com and www.howardhanna.com.
