Last updated on April 15th, 2025 at 03:23 pm
The real estate market has been on a roller coaster ride over the last few years, making it challenging to understand fully. Limited supply, increasing mortgage rates, and rising home prices have discouraged many potential buyers, leaving many waiting to see whether rates would decrease.
We compiled the real estate market forecasts from high-level experts and organizations over the next five years. As some trends accelerated by the COVID-19 pandemic begin to fade, other factors such as changing demographics, rising climate change costs, an increasingly unstable world, and the expansion of AI into the larger economy can all impact real estate market prices. This article will give you the most accurate market prediction for the coming years based on studied and researched data. Guiding you in making the right decisions for your investment.
Key Takeaways
- Real estate market is forecasted to grow by 2.77% annually from 2024 to 2029.
- Housing market stability is expected in 2024, with moderate growth by 2025 and continuing expansion through 2028.
- Millennials dominate the buyer demographic; supply remains tight despite increasing listings.
- Mortgage rates are predicted to remain high in 2024, with a potential decline to 5.5% - 6% after two years.
- Housing market is not in a bubble, and a market crash is unlikely in 2024 due to strong housing demand and low supply.
Real Estate Market Price Forecast
Statistica, a worldwide data and business intelligence platform, examined the real estate industry’s behavior over the next five years utilizing key market indicators and data from established associations. The results showed that the real estate market is projected to grow by 2.77% per year over the next five years. As a result, the market’s value will rise from $634.90 trillion at the end of 2024 to $727.80 trillion in 2029.
The forecast is based on qualified data sources, including the three main real estate segments: residential, commercial, and land. As the global population continues to grow and urbanize grows and urbanizes, there is a rising demand for residential real estate, which is expected to dominate the real estate market.
Housing Market Prediction
2024. This year is expected to bring more stability to the housing market after past years of uncertainty. Experts believe the housing market will improve despite high mortgage rates, out-of-reach home prices, and slow sales transactions amid weak demand. This is excellent news for buyers waiting for the right time to enter the market.
The growing costs and repercussions of climate change will influence the housing market in 2024. Homebuyers and builders must consider the costs of developing homes that are adaptable to climate change and severe weather.
According to the most recent data from Realtor.com, the shift from increasing to decreasing mortgage rates is expected to improve house affordability. However, this change may reduce the sense of urgency among home buyers. Despite the lower level of housing demand, the availability of rental housing options is likely to keep home sales largely consistent at low levels through 2024.
2025. The Federal National Mortgage Association, known as Fannie Mae, predicts that the housing market will rise modestly by 2025. With mortgage rates expected to remain around 7% by the end of 2024, the housing market’s growth may be attributed to a drop in mortgage rates by 2025, as well as an increase in revenues and home affordability.
Many buyers are likely to acquire homes as housing demand remains high and supply is still falling short. Furthermore, with growing technology in how real estate projects are designed and constructed, such as 3D printing, structural advanced components, and sophisticated software. These technologies can speed up the building process and improve quality while saving better cost in construction.
2026. According to the National Association of Home Builders, the housing market is predicted to continue expanding in 2026, with home prices increasing at a modest rate. The cumulative demand for housing is estimated to be fulfilled between 2025 and 2030.
The overall cost of homeownership is projected to become an even more significant indicator in 2026, as buyers and builders consider the cost of climate change and other external variables. The rising costs of insurance and building materials and the need to adapt to a changing environment will require homeowners to examine the total cost of homeownership when making purchase decisions.
2027. The housing market forecasts for 2027 will need careful study since it is becoming increasingly difficult to anticipate due to various factors such as economic growth, interest rates, population growth, employment development, and government restrictions. Based on a survey to identify the people’s preferred community in the next 5 years. The findings showed that 37% prefer a suburban neighborhood, 30% prefer an urban setting, and 27% prefer rural one.
This suggests that more people are moving from rural to urban or suburban areas, creating a higher demand for housing in cities. As a result, apartment buildings and townhouses may be built to cater for growing numbers of people. Another factor that could affect the housing market is the ongoing advancement of technology, which may lead to increased demand for homes.
2028. Lawrence Yun, NAR’s chief economist, predicts that the home market price will increase by 15 to 25 percent over the next five years. The home prices becoming more expensive can be observed at a much slower pace. The combination of different factors, such as more supply and lower mortgage rates, could improve housing affordability for buyers.
The mortgage reports show the growth of housing supply is expected by 2028, with some predicting a return to a more balanced market in which supply matches demand. This could be due to factors such as lower interest rates, which encourage existing homeowners to sell, and construction catching up.
Housing Market Prices Will Rise
The National Association of Realtors (NAR) shows that the average price for an existing home is $384,500, and a new-construction home shows a slightly higher price at $420,500. NAR projected that home prices could reach up to 5.7% annually.
Pulseconomics partnered with Fannie Mae and surveyed over 100 economists, financial strategists, and housing industry observers for the Home Price Expectation Survey. The study forecasts what will happen to housing values in the following five years (2024-2028). The findings revealed that, while property prices vary by local market, experts expect prices to rise across the country for the foreseeable future.
In this example, assume you purchased a $400,000 property at the beginning of 2024. Considering the HPES forecast, you could accumulate almost $71,000 in net worth over the next five years.
The pandemic has substantially influenced both the real estate and land use industries. These consequences will continue to influence regional housing markets’ demand and supply over the next five years as acute shortages drive demand and higher house prices. Emerging technology, shifting demographics, employment development, and the rise of remote work are among the main trends projected to affect the housing market in the coming years.
The Buyers and Sellers' Demographics
The National Association of Realtors, America’s largest trade association, presented the report for 2024 Home Buyers and Sellers Generational Trends data. The report found that Millennials have surged to become the largest group of home purchasers, indicating a substantial shift in the housing market’s demographic data.
The data also reveals that the majority of first-time buyers are under the age of 40, indicating a large buyer pool and a promising sign that demand will remain strong, especially given that housing inventory is at a historical low.
In this example, assume you purchased a $400,000 property at the beginning of 2024. Considering the HPES forecast, you could accumulate almost $71,000 in net worth over the next five years.
The pandemic has substantially influenced both the real estate and land use industries. These consequences will continue to influence regional housing markets’ demand and supply over the next five years as acute shortages drive demand and higher house prices. Emerging technology, shifting demographics, employment development, and the rise of remote work are among the main trends projected to affect the housing market in the coming years.
Generation Z
- Age 18 - 24
- Buyer: 3%
- Seller: 2%
Gen Y/Millenials
- Age 34 - 43
- Buyer: 38%
- Seller: 23%
Generation X
- Age 44 - 58
- Buyer: 24%
- Seller: 23%
Baby Boomers
- Age 59 - 77
- Buyer: 31%
- Seller: 45%
Silent Generation
- Age 78 - 98
- Buyer: 4%
- Seller: 6%
Housing Supply and Demand for 2024
Although more resale properties are entering the housing market, the supply shortage remains severe and is expected to persist for some time due to various factors. For one thing, many homeowners are drawn to ultra-low mortgage rates, unwilling to pay a higher rate in a high-priced housing market.
As a result, demand continues to surpass housing supply and is expected to do so for a while. “I don’t expect to see a meaningful increase in the supply of existing homes for sale until mortgage rates are back down in the low 5% range, so probably not in 2024,” says Rick Sharga, CEO of CJ Patrick Company, a market intelligence and business advisory firm. New home construction has brought some relief, but not enough to fill the inventory gap effectively.
According to Zillow, the United States remains 4.5 million houses short, compared to 4.3 million from the previous year. Entry-level housing supply is severely limited, resulting in an ongoing cycle of inflated prices and increased demands.
Should You Sell Your House or Wait?
The real estate market in the U.S. continues to attract buyers, although there are fewer bidding wars and soaring sale prices than in 2021. If you sell your property in 2024, buyers will be less likely to make an offer above the asking price, and they may not look at all if the asking price is too high.
There are still numerous factors to consider when selling a home, particularly given the present market conditions. The seller should consider each aspect of it. For instance, mortgage interest rates have lately skyrocketed, hitting levels not seen in more than 20 years. While they have eased down from the 8% threshold observed in October 2023, Bankrate’s weekly survey of large national lenders indicates that the average 30-year fixed mortgage rate was 7.17% in late May.
If an expert opinion is any guide, now may still be a good time to sell despite the evolving market. According to Fannie Mae’s April 2024 Home Purchase Sentiment Index, almost 67% of respondents believe now is a favorable time to sell.
You could also consider consulting with real estate professionals who can provide insights on how to play the market effectively. According to Orphe Divounguy, senior economist at Zillow, properties that are priced to sell and have all of the marketing features and amenities, such as a 3D home tour and excellent photography, have been selling quickly and receiving multiple offers.
Mortgage Rates Forecast
After reaching a 2024 high of 7.22% in early May, the average 30-year fixed mortgage rate dropped below 7%, climbed back above 7% at the end of May, and began its downward trend in June.
Keith Gumbinger, vice president of online mortgage, reported that the average 30-year fixed mortgage rate stayed constant in July, at 6.78% for the week ending July 25, a slight rise from 6.77% the previous week. He adds that mortgage rates returning to a more “normal” upper 4% to lower 5% range would also help the housing market’s eventual recovery to 2014-2019 levels. Gumbinger, however, expects it could be a while before we return to those rates.
In addition, Lawrence Yun projects mortgage interest rates will remain around 7% for most of 2024. He expects that the rate will return to 5.5% or 6% after two years, considering that the federal budget deficit does not permanently raise all borrowing rates. Because interest rates remain high, Yun foresees more interest in adjustable-rate mortgages until next year. Following that, he predicts that 90% of Americans will go back to the traditional 30-year fixed-rate mortgage.
Are We in a Housing Bubble?
The housing bubble, also known as the real estate bubble, is characterized by a rapid rise in housing prices in the housing market. It could be driven by unique variables such as the housing demand, speculation, or even manipulation of the housing market price. The housing bubble continues to expand until it reaches an unsustainable level, after which the bubble bursts and prices fall.
In a 2022 study, the Federal Reserve Bank of Dallas highlighted signs of a “brewing U.S. housing bubble.” Although the high increase in housing prices does not suggest a bubble, according to the analysis, there are other essential factors that still need to be considered.
Experts believe that the United States is not in a bubble. Len Kiefer, Freddie Mac’s deputy chief economist, does not believe the U.S. housing market is in a bubble. “A bubble has three defining characteristics: price growth is driven by speculation, bubbles are fueled by credit expansion, and bubbles pop.” He believes that the reason house prices grew at record rates in 2021 was not because of bubble speculation or credit expansion but rather because of the shift in housing demand and low mortgage rates.
Will the Housing Market Crash in 2024?
The housing market will not crash. There are still significantly more buyers than sellers, and as a result, a significant price decline will not happen. Mark Fleming, chief economist of First American Financial Corporation, says there are more people than housing supply, and it’s common sense to know that the market will not crash.
According to Tom Hutchens, executive vice president of production at Angel Oak Mortgage Solutions, the low housing supply helps defend against a market crash. Furthermore, experts note that today’s homeowners are in a far better financial position than those who emerged from the 2008 financial crisis, with many borrowers having large home equity.
Orphe Divounguy believes that many factors, including Millennials entering their prime home-buying years, wage growth and financial wealth, are the primary drivers that will sustain the housing demand in 2024.
Dave Liniger, the founder of real estate company RE/MAX, claims that the recent increase in mortgage rates has altered the market. Many potential buyers have been waiting for rates to drop, but if rates fall significantly, many new buyers will enter the market, driving up home prices.
