Based on the 2025 housing forecast from Realtor.com, home prices are expected to grow by 3.7% in 2025, while average mortgage rates will drop from 6.3% to 6.2% by the end of the year.
With Donald Trump coming into office in 2025, certain demographics are optimistic about the housing market’s future and the possibility of a bump.
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Here are some of the other forecasts from Realtor.com that are worth pointing out before we proceed:
- Rents will remain around the same level, with a small drop of about 0.1%.
- There will be an 11.7% increase in the existing home inventory.
- Home sales will reach 4.07 million, which is an increase of 1.5% on an annual basis.
- Months of supply of homes will go from an average of 3.7 months to 4.1 months in 2025
Will there be a Trump housing bump? Here are three pros and cons of a Republican-controlled Congress regarding the real estate market in 2025.
Pro #1: Housing Prices Will Continue To Rise
“Home prices are expected to continue to rise in 2025, but the pace of growth will soften as rising inventory ushers in a more balanced housing market after nine years in sellers-market territory,” said Danielle Hale, chief economist at Realtor.com. “This is a plus for sellers, who will still see healthy levels of home equity.”
If you’ve been waiting for the right time to sell your home, you could still expect some growth, allowing you to build more equity in 2025. If rates continue to drop, then you can benefit from the combination of a higher selling price and lower mortgage rates as you decide on your next move.
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Con #1: Potential First-Time Buyers May Have To Wait Longer
How one views a potential housing bump will depend on their situation. If you’ve been looking to enter the real estate market for the past few years, you may not have the lower housing prices that you were hoping for.
Hale elaborated on increasing home values: “For first-time buyers, this puts the goal line somewhat further ahead, but they’ll get some help in the form of gradually easing mortgage rates and rising incomes.”
While you may not find a lower price on a home, the mortgage payments could be more affordable, allowing you to qualify for that loan in 2025.
Pro #2: Fewer Regulations and Faster Building
“If Trump rolls back housing regulations, as he did during his first term, it could lower construction costs and speed up homebuilding, which may help with the inventory shortage,” said Yoann Dorat, a real estate advisor at One Sotheby’s International Realty.
While it’s too soon to tell what will happen, fewer regulations and the quicker building would increase the inventory, allowing more people to purchase their first piece of property under the Republican administration.
Con #2: Rising Mortgage Rates
“Economic uncertainty and potential inflation could push mortgage rates higher, making it harder for buyers to afford homes,” noted Dorat.
Based on the data from Realtor.com, it doesn’t appear like mortgage rates will decrease a substantial amount. If inflation doesn’t cool down, then interest rates may remain high, making housing as expensive as it was in 2024.
“Even though home prices are forecast to go up, affordability will eke out a modest improvement over last year,” Hale added.
There are no guarantees that the Trump-led government will be able to bring down mortgage rates and housing affordability in 2025.
Pro #3: More Disposable Income
“I think that we will see a small bump in housing due to the Trump administration taking office, and it will likely be from a strengthening economy rather than any other factors,” said Robert Washington, founder and broker at Savvy Buyers Realty.
“If he’s able to implement policies that will help bring interest rates down it will certainly help to increase home buying activity.”
Dorat also pointed out that tax cuts could give homebuyers more cash in their pockets, making down payments and monthly mortgage payments more manageable. If Americans have more money in their bank accounts, they’ll have more to invest in real estate, leading to a bump in 2025.
“There are those expecting economic growth with his policies and the possibility of changes in household tax rates, which could help make houses more affordable,” said Adam Hamilton, the co-founder of REI Hub.
Con #3: Increased Prices From Labor Shortages and Tariffs on Building Materials
Stricter immigration policies could limit the construction labor force, slowing down homebuilding and driving up costs.
“If tariffs on building materials like lumber or steel are reintroduced, construction costs will rise — and so will home prices,” Dorat added.
With higher costs for raw materials, there may not be the significant drop in housing prices that some expect with a Republican government.
“There are those expecting prolonged and increased inflation, as well as potential issues caused by his proposed tariffs, like a decrease in wood imported from Canada due to the tariffs, leading to less new home construction,” Washington said.
The Bottom Line
While there are distinct pros and cons to how Trump can impact the housing market, it’s worth noting that many complex dynamics are also at play regarding something as expansive as the real estate space.
Hamilton concluded, “The housing market is impacted by so many different factors that we won’t really know what becomes of it until we get there.”
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: Will There Be a Trump Housing Bump? 3 Pros and Cons of a Republican Congress
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