Will housing values be lost in 2025? Here are the areas where prices have fallen the most
Zillow said the trend reflects affordability pressures, high mortgage rates and weak demand across the country.
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Home sales have fallen to a new low as the housing market remains neutral.
The National Association of Realtors announced on April 13 that existing home sales in March remained at a pace of 3.98 million units. That means if sales continue at this pace each year, 3.98 million homes will be sold, the lowest since 1995.
Additionally, NAR has significantly revised down its outlook for this year. In December, the group predicted a 14% increase in sales compared to 2025, when Americans sold just over 4 million homes. The group is currently forecasting a 4% increase.
“Weak consumer confidence and slowing job growth continue to deter buyers,” Lawrence Yun, NAR’s chief economist, said in a statement.
Lack of inventory and high prices were also to blame, he said, but added: “Mortgage rates are rising, which has led to a downward revision to our home sales outlook for this year.”
Mortgage interest rates fell below 6% in late February for the first time since 2022, but were temporarily depressed due to the impact of the Iran war. Inflation caused by the war, mainly due to soaring energy prices and supply chain disruptions, caused interest rates to rise again.
As a result, the number of mortgage loan applications decreased for the fourth consecutive week.
Plummeting consumer confidence
Many Americans don’t feel like looking for a home, no matter how expensive the debt is.
The latest reliable measure of consumer sentiment, released on April 10, fell to an all-time low.
“Regardless of age, income or political affiliation, all respondents reported a decline in sentiment, as did every component of the index, reflecting the widespread nature of this month’s decline,” said University of Michigan research director Joan Hsu.
“Evaluations of personal financial health have fallen by about 11%, and consumers are significantly more concerned about rising prices and declining asset values,” she added.
Still, NAR’s measurements capture trades that took place during March, meaning headwinds from the Iran war have not yet appeared in its data.
All real estate is local
In some parts of the country, demand remains stronger than ever. Rich Rosa, broker and owner of Buyers Brokers Only, said prices have been rising “straight up” in the Boston metropolitan area for more than a decade due to its strong technology sector and attracting great school systems.
Rosa’s biggest problem is finding enough supply to meet all the demand. He sees multiple offers even in suburbs as far as 45 minutes from the city. But even in a market this hot, there are some potential pitfalls.
He said if mortgage rates continue to rise like they did in 2022, buyers are likely to hold off.
“Spring market momentum remains fragile,” Lisa Sturtevant, chief economist at Bright MLS, said in a note after the NAR data release. “Resolution of the (Iran) conflict will support a recovery in the housing market. However, if uncertainty, rising prices and mortgage rates continue, the spring could be very slow.”
As Rosa said in an interview with USA TODAY, “None of us know what the impact of a few months of $4 gas will be.”
