- Last year was the toughest for entry-level home affordability in four decades.
- Prospective buyers have reasons to be hopeful, but mortgage rates aren’t among them.
- Here’s what top real-estate analyst Ivy Zelman thinks will happen in 2025.
The US real-estate market is bound to have a better year in 2025 after a historically horrible stretch for housing affordability, but those looking for major improvements may be disappointed.
Entry-level home affordability reached a 40-year low last year, according to data compiled by Zelman & Associates, the real-estate research firm led by famed analyst Ivy Zelman.
Would-be homebuyers were battered by exorbitant property prices and mortgage rates. Although both aspects of affordability improved modestly from peak levels, it wasn’t enough to give home sales a meaningful jumpstart.
Younger generations who didn’t already own property had it toughest. First-time homebuyers made up less than a quarter of purchases, Realtor.com found — the lowest rate since 1981. Housing analysts are likely sick of references to the 1980s, which was one of the toughest times on record for home affordability.
The new year often brings optimism, and 2025 is no different for those hoping to buy a house.
But it may be best to stay patient, based on year-ahead projections from Zelman and her team. Their estimates for mortgage rates, home sales, prices, and supply in a January report indicate that the year ahead will be better in many ways than 2024, though still full of headaches.
Heeding Zelman’s calls has historically paid off. Nearly 20 years ago, Zelman was famously skeptical about the housing market. Shortly after came the housing bubble and financial crisis. She also warned of higher home insurance costs this summer due to rising global temperatures, before the devastating California fires that some observers say are climate change-related.
Below are eight charts from Zelman’s report showing what’s next for US real estate, which includes the housing and rental markets.