Federal policy changes could impact real estate in surprising ways, but economists are predicting fairly modest shifts in the new year.

Forecast season has arrived, but for housing market economists, 2025 may be one of the more challenging years to predict.

One reason? It's a transitional year for the country. A new presidential administration will be sworn in next month, and many expect an economic shakeup. During his campaign, Donald Trump made a number of declarations about tariffs, immigration, tax cuts and construction regulations; while it's too soon to know how (or if) these proposals will translate to policy, economists generally agree they could lead to a risk of higher inflation, deterring future rate cuts and keeping mortgage rates elevated.

"There will be competing pressures in 2025, creating a tug-of-war that could impact the housing market in surprising ways," said Lisa Sturtevant, Bright MLS Chief Economist. While pent-up supply and demand are waiting to be "unleashed," they may be constrained by "economic uncertainty and political unpredictability," Sturtevant noted.

Despite that uncertainty, economists from Zillow, Redfin, Realtor.com and Bright MLS are placing their bets on how the real estate market will fare in the coming year.

Home sales will get back above 4 million
The annualized rate of existing home sales has remained under 4 million since June — far below the 6+ million rate seen in 2020 and 2021. But there seems to be a consensus among economists that sales will improve in 2025, though opinions differ on how much:
Existing home sales will rise 7.5% to 4.4 million for the year (Bright MLS).

A modest 1.5% increase will push sales just over the threshold to 4.07 million (Realtor.com).

Sales will rebound slightly, ending the year at around 4.3 million (Zillow).

Hedging their bets, Redfin economists put the number between 4.1 and 4.4 million. "We're presenting an unusually wide sales range this year because while high housing costs may price out some would-be buyers, there's a fair amount of pent-up demand in the market," they said in their forecast.

What about new homes? If regulations ease, builders may increase production; fresh inventory could accelerate sales, particularly since builders have greater flexibility around financing and other incentives.

Executive Message

Amid hustle, bustle, we prepare for 25

By Ray Adauto
Executive Vice President, EPAB

The Holidays are upon us and once again we look forward to the new year. Our agenda will be full as we take our every other year pilgrimage to the state Capitol to meet with our legislators and Senator. This takes place on February 11, followed by two days of meetings at the TAB Winter Board. We are looking at getting a good turnout from El Paso, always a fantastic way to walk into the Capitol and meet one on one with the folks making important decisions for us professionally and personally. The official hotel is the OPMNI Austin, 8th street in downtown Austin. Join us.

Our end-of-year events were successful with the generosity of our members and their support. Parade of Homes went well, our turkey drive hit new highs, and our installation was a success. I would like to thank all our sponsors for their support, and the 280 guests we had that night. The event is featured in a story on page five.

As we wind the year down, we look at what is to come, and as you’ll see the headline will be “change.” Margaret will be stepping down in the next few months, something we have semi-planned for. Semi because she is a wealth of knowledge that just can’t be replaced as I’m sure many will agree. So in that effort we are transitioning our association systems into a new (to us) management support system called NOVI.

The changeover will take probably 120 days, and then maybe a little more. Not that it is complicated but because we will be discovering new processes and opportunities using it. Bear with us during these moves. All good things take time and patience. Be prepared for both.

Happy New Year. See you in January.

Mortgage Rates Rise Amid Post-Election Market

Mortgage rates climbed in November, driven by market volatility and a surge in Treasury yields following the recent elections. On the day after the election results, the 10-year Treasury yield spiked by 14 basis points (bps), setting the stage for further rate increases throughout the month.

According to Freddie Mac, the average rate for a 30-year fixed-rate mortgage increased 38 basis points from October, reaching 6.81%. Meanwhile, the 15-year fixed-rate mortgage saw an even steeper increase of 43 bps to land at 6.03%.

The 10-year Treasury yield, a key benchmark for mortgage rates, averaged 4.37% in November — 38 bps higher than October’s average. This increase reflected heightened market uncertainty and persistent volatility.

NAHB Economist Catherine Koh shares forecasts for how these rates may be impacted following the activities of the Dec. 17-18 meeting of the Federal Reserve in this Eye on Housing post.