Brian Icenhower explains the Icenhower Institute's 2025 real estate market projections by explaining 2024 & 2025 industry data for real estate agents to use to educate their clients & the public.
The real estate industry is constantly evolving, shaped by economic shifts, supply and demand fluctuations, and consumer behavior. As we enter 2025, real estate professionals must be well-versed in market trends to guide their clients effectively.
At the Icenhower Institute, we have analyzed the data, and our projections for the 2025 real estate market reveal several key trends that will influence buying and selling decisions in the coming year.
For full access to our spring/summer 2025 real estate market charts and graphics, so that you can use them in your business, enroll in our Industry Update course, below.
VIDEO: 2025 Real Estate Market Projections – the Icenhower Institute
A Look at Home Sales Trends
Over the past few years, we have seen a decline in total annual U.S. home sales. The primary culprits? Rising interest rates and a persistent lack of housing inventory.
However, as we move into 2025, we anticipate an increase in home sales. This expected uptick is largely due to improvements in inventory levels, as more new homes enter the market and homeowners adjust to the current mortgage rate environment. While predicting interest rate changes remains a challenge, we believe that even marginal improvements in rates could stimulate buyer activity.
Despite fewer transactions in recent years, total sales volume remains high. In fact, 2024 ranked among the top years in history in terms of total real estate sales volume. This is largely due to rising home values, which continue to push commission dollars higher for agents. While the number of home sales may not return to pandemic-era highs, the opportunity for real estate professionals to earn substantial income remains strong.
For full access to our spring/summer 2025 real estate market charts and graphics, so that you can use them in your business, enroll in our Industry Update course, below.
Home Prices Continue to Appreciate
One of the biggest takeaways from our analysis is that home prices are set to rise again in 2025. Supply and demand dynamics remain the dominant factor in real estate pricing, and with inventory still struggling to meet demand, we expect home values to climb. The annual median home price is projected to increase to $419,000 by the end of 2025, up from $408,000 in 2024.
This consistent upward trajectory in home prices underscores a fundamental truth: real estate is one of the most stable investments available. Buyers waiting for prices to drop are likely to be disappointed. Historically, real estate appreciates over time, making it a solid long-term investment strategy.
New Home Construction and Inventory Growth
New construction has been a crucial factor in the inventory equation. After years of underbuilding following the Great Recession, builders have ramped up production. In 2025, we expect to see an increase in newly built homes, which will provide much-needed relief to supply shortages. However, even with this increase, it will take years of sustained construction to fully meet demand.
The impact of new construction will be especially evident in markets where population growth has outpaced available housing. Markets in states like Texas, Florida, and Tennessee, which experienced a post-pandemic migration surge, are beginning to stabilize. More new homes are coming online in these regions, offering buyers additional options.
As we enter 2025, real estate professionals must be well-versed in market trends to guide their clients effectively.
Brian Icenhower
Mortgage Rates and Buyer Behavior
Mortgage rates remain a hot topic in real estate. Following the rapid rate hikes of 2022 and 2023, we are now seeing some stabilization. Experts project that the average 30-year fixed mortgage rate will hover around 6.65% in 2025, slightly down from 6.72% in 2024.
While higher mortgage rates have caused some buyers to hesitate, history shows that consumers eventually adjust to new rate environments. Moreover, buyers are increasingly aware that refinancing opportunities may arise in the future. Encouraging hesitant buyers to focus on home appreciation potential rather than short-term rate concerns is key.
The Role of Equity in Today’s Market
One of the most overlooked advantages in today’s market is the substantial amount of homeowner equity. U.S. homeowners collectively hold record-high levels of equity, which presents unique opportunities for both buyers and sellers. Move-up buyers, in particular, can leverage their equity to transition into higher-value homes while minimizing the impact of higher interest rates.
The Importance of Real Estate Professionals
Despite advancements in technology and online listing platforms, the role of real estate agents remains critical. Data from the National Association of Realtors (NAR) shows that nearly 90% of homebuyers still use an agent when purchasing a home. Additionally, homeowners who list with an agent consistently sell their properties for higher prices than those who attempt to sell by owner (FSBO).
Real estate agents must be prepared to communicate these market insights to their clients. Educating buyers on why waiting to purchase could cost them significantly in the long run is crucial. Likewise, guiding sellers through effective pricing strategies and marketing approaches will ensure they maximize their returns in today’s evolving market.
Final Thoughts
The 2025 real estate market presents challenges, but also immense opportunities. Agents who stay informed, adapt their strategies, and proactively engage with clients will thrive in this environment. By leveraging market data, understanding the impact of supply and demand, and educating buyers and sellers, real estate professionals can position themselves as trusted advisors in the industry.
At the Icenhower Institute, we believe that knowledge is power. As we navigate the coming year, staying ahead of trends and embracing change will be key to success. The opportunities are there—are you ready to seize them?
