National Association of REALTORS® Chief Economist Lawrence Yun has expressed optimism about a housing market rebound in 2025, pointing to modest price growth and a projected increase in home sales. Speaking at a REALTORS® forum in Washington, D.C. earlier this month, Yun outlined a scenario in which lower mortgage rates and job growth converge to fuel renewed momentum in both the existing-home and new-home markets.
Yun’s revised forecast, released on June 20, projects a 6% increase in existing-home sales and a 10% rise in new-home sales compared to 2024. The outlook is based on the assumption that mortgage rates will decline to around 6.4% by the end of the year—a threshold he believes would significantly boost buyer confidence and unlock pent-up demand.
“The mortgage rate is the magic bullet,” Yun stated, emphasizing its central role in shaping housing affordability. Although rates remain above 6.6% as of mid-June, many economists, including Yun, anticipate a gradual decline in the second half of 2025 as the Federal Reserve begins to ease monetary policy and inflation continues to moderate.
One of the key factors supporting Yun’s positive forecast is the strength of the labor market. He expects the U.S. economy to add approximately 1.6 million jobs in 2025, creating a stable foundation for homebuying activity. In addition, wage growth—currently outpacing inflation—may further enhance purchasing power, particularly for first-time buyers who have been priced out of the market in recent years.
While 2025 began with sluggish housing activity, particularly in the resale market, new-home sales are showing signs of resilience. Builders have adapted to high mortgage rates by offering incentives such as rate buydowns, rather than reducing asking prices outright. These strategies have made new homes more attractive to buyers navigating affordability challenges.
Yun also projects that home prices will rise modestly by about 3% in 2025, followed by a slightly stronger 4% increase in 2026. This restrained pace of appreciation is expected to create a more balanced housing environment—one that benefits both buyers seeking stability and sellers hoping for value retention.
Inventory constraints, however, remain a concern. While new listings have gradually increased, the overall supply of homes—particularly affordable entry-level units—remains below pre-pandemic norms. Yun suggests that markets with the tightest inventory may see faster price gains, making them prime targets for real estate professionals and investors alike.
For agents and brokers, Yun’s outlook provides a strategic roadmap. First, attention should be directed toward new-construction opportunities, especially in regions where job growth and housing affordability align. Second, as interest rates potentially decline later in the year, agents should be ready to engage with sidelined buyers who were previously deterred by high borrowing costs.
Nevertheless, several risks could impact the forecast. Yun cautions that persistent federal budget deficits may keep mortgage rates higher for longer, even if the Fed begins to cut its benchmark interest rate. Additionally, global economic uncertainties—such as trade disputes and inflationary shocks—could complicate the rate outlook and suppress consumer sentiment.
Still, Yun remains confident that the second half of 2025 will mark a turning point for the U.S. housing market. If mortgage rates fall as expected and job creation remains robust, he believes sales activity will accelerate and price appreciation will continue on a stable path. The outlook into 2026 is even more encouraging, with projected gains of 11% in existing-home sales and 5% in new-home sales.
In summary, while the housing market’s recovery depends heavily on macroeconomic conditions, Lawrence Yun’s projections provide a cautiously optimistic guide for what lies ahead. With falling rates, strong employment trends, and adaptive strategies from homebuilders, 2025 may offer new opportunities for buyers, sellers, and real estate professionals across the country.