What’s Ahead for the US Housing Industry in 2025?

December 29, 2024 TruthUSA

The coming year will be challenging for the U.S. housing industry, as affordability, low inventory, the prospect of tariffs on imported construction materials, and immigration limits could constrain growth. However, there will be pockets of strength across industries and local markets.

The current year was a moderate one for the housing market. Home prices resumed rising after a brief pause in 2023, with 29 percent of sales taking place at above the listed price. New home sales edged up higher, while existing home sales hovered near multiyear lows.

That’s despite solid U.S. GDP growth, steady job growth, low unemployment, and declining mortgage rates in the months leading up to the Federal Reserve’s September policy meeting, all of which fueled demand for homes.

Going into 2025, the housing market will still face challenges. First, home affordability declined as median home prices rose faster than median income. Second, monetary policy is about to become less accommodative, and mortgage rates are rising. Third, there’s a big unknown about the new administration’s tariff and immigration policies, which could raise home construction costs.

Still, some experts predict good times for the housing industry in 2025, though the prospects vary by industry segment and geographical region.

Derrick Barker, CEO and co-founder of Nectar, sees the multifamily segment remaining strong heading into 2025 despite current pressure on rents from new deliveries.

“Once this wave of supply gets absorbed—which population trends suggest it will—we should see rent growth resume,” he told The Epoch Times via email.

“The incoming Trump administration could accelerate this recovery by establishing new ‘ultra-low tax and regulation zones’ and streamlining financing regulations. With a national housing shortage of 2 million homes, the real opportunity lies in addressing the affordable housing crisis.”

Ryan Meagher, pre-construction manager at BVM Contracting, said the densification of residential properties is another housing trend that will continue its momentum into 2025.

“There will be more properties with multiple dwelling units (secondary suites, accessory dwelling units, basement apartments) that will help the homeowners pay their mortgages and combat the housing shortage that some larger cities are seeing,” he told The Epoch Times via email.

Ryan Barone, co-founder and CEO of RentRedi, says another segment that could fare well in 2025 is home improvement.

“An internal survey of 3,500 RentRedi landlords reveals that at least 80 percent of them plan to invest in home improvement projects for their rental properties in 2025,” he told The Epoch Times via email.

Additionally, internal designing could thrive in the new year, according to Bree Steele, interior designer and trade accounts manager at RJ Living.

That’s due to the proliferation of smart devices that have become an integral part of the modern home.

“Smart home technology is shaping how we design interiors,” she told The Epoch Times via email.

“I’ve worked with clients to integrate app-controlled lighting, automated blinds, and smart thermostats seamlessly. Homes feel increasingly comfortable installing this kind of technology, and we will see more of it in 2025.”

Locality will also be a factor in shaping housing rends in 2025, as supply and demand conditions differ across the nation.

“Areas with low inventory (the Northeast) and soft demand will see less than a 5 percent jump in activity,” Jeff Lichtenstein, CEO and broker at Echo Fine Properties, told The Epoch Times via email.

“Remember that 2024 saw its slowest growth since 2024, so historically, even a 5 or 10 percent bump is still low. Right now, we are seeing more activity from pent-up demand, with people holding off due to uncertainty of the November election. Those in the wealthier category purchase more as they know taxes and capital gains will be lower with the Trump administration.”

Lichtenstein said regional laws and regulations will influence sales as well.

“The condo market in South Florida is a complete buyers-market and has seen its inventory jettison upward to over 8 months of supply and nearly a 100 percent jump in inventory from last year at this time,” he said. “This is due to good regulations resulting from the tragic Surfside building collapse.”

But he’s concerned about a big unknown: how the new administration will affect the markets.

“Mass deportation and tariffs will all impact inflation and the markets,” he said.

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