As summer winds down, the real estate market is showing no signs of cooling off. In fact, industry experts are predicting a significant upturn in the coming years. Let’s dive into what this means for buyers, sellers, and investors.

Market Turnaround on the Horizon

According to Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), we can expect more robust homebuying activity in 2025. This positive outlook is based on several key factors:

Falling Mortgage Rates: Experts anticipate a decrease in mortgage rates in the coming months, making homeownership more accessible for many.

Increasing Inventory: The market is likely to see a pick-up in available properties, offering more options for potential buyers.

Easing of the “Lock-in Effect”: Yun predicts that the reluctance of current homeowners to sell due to low mortgage rates will subside as life circumstances necessitate moves.

Federal Reserve Actions: The Fed is expected to cut its benchmark interest rate this fall, potentially leading to lower mortgage rates in 2025 and stimulating market activity.

Regional Variations and Price Moderation

While the overall outlook is positive, it’s important to note that market conditions can vary by region. Fannie Mae economists have observed that many Sunbelt metros are currently experiencing significant increases in for-sale inventories, partly due to new construction.

This gradual increase in supply, coupled with affordability-constrained demand, is expected to moderate home prices. In the second quarter, the Fannie Mae Home Price Index showed a 3% increase on a non-seasonally adjusted basis. However, this growth rate is anticipated to slow down in the coming months.

What This Means for You

For potential buyers: If you’ve been waiting on the sidelines, 2025 might be your year to enter the market. Keep an eye on mortgage rates and be prepared to act when they drop.

For sellers: While the market is heating up, increased inventory means more competition. Focus on making your property stand out and consider timing your sale to coincide with the predicted upturn.

For investors: The combination of moderating prices and increasing activity could create interesting opportunities, especially in high-growth areas.

As always, real estate decisions should be made based on your individual circumstances and local market conditions. Stay informed and consider consulting with a local real estate professional to make the best choices for your situation.