Home prices may fall in 2025 due to economic turbulence
Key takeaways:
- Nearly a quarter of Americans are scrapping plans for major purchases, including buying a home,and nearly a third are delaying purchases.
- Americans are avoiding homebuying at a time when sales are faltering and prices have flatlined.
- There may be dealsif a decline in homebuying lowers home prices.
Tariffs are causing Americans to scrap big ticket purchases, presenting opportunities for those with deeper pockets.
The tariffs are harminghousing markets in a few ways, including sending mortgage rates seesawing and boosting construction costs.
Now, more than half of Americans are cancelling or delaying major purchases, such as homes and cars, because of the tariffs,according to aApril 10 to 14 survey by real-estate brokerage Redfin.
Some 39% of survey respondents also said they were much less likely to make a major purchase this year.
Consumers are tightening their belts because they are rightly nervous about their job security and the prospect of paying more for everyday expenses," said Redfin economics lead Chen Zhao in a statement.
A decline in Americans buying homes could benefit prospective homebuyers looking for a better deal.
"There are some potential silver linings for homebuyers: the drop in demand could cause home prices to stay flat, or even fall, and theres some chance mortgage rates could drop in the next few months, Zhao said.
Homes have beenselling at their slowest pace in six years, with homes typically staying on the market for 47 days, the longest period of any March since 2019,Redfin said.
Home values have only risen 0.2% in March, a month of typically strong growth, and prospective homebuyers now have 19% more homes to choose from thana year ago, according to a report from real-estate website Zillow.
Zillow's home price forecast has also turned negative,predictingthat prices decline 1.7% in 2025.
"Buyers especially first-timers without equity to pour into their down payment continue to struggle with affordability and now are facing even higher levels of uncertainty," said Zillow Chief Economist Skylar Olsen in a statement. "A turbulent economy likely weighs more heavily on first-time buyers than more firmly established sellers."
Still, there are strong real-estate markets in the Northeast and Midwest, where homes available for sale still remain well below prepandemic 2019 levels, even though "there's growing softness and weakness right now in many pockets of the Sun Belt,"said Lance Lambert, co-founder and editor and chief of industry publication ResiClub,in anewsletter.
Lambert said Zillow's negative forecast may be too bearish, consideringthere are other reputableforecasts still predicting home prices to rise in 2025 as of March, including Fannie Made predicting a 1.7% increaseand Wells Fargo saying home prices will rise 3%.
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Posted: 2025-04-18 11:38:18
