- Redfin (RDFN, Financial) predicts a 1% decline in U.S. home prices by year-end as inventory rises and demand falls.
- Mortgage rates are expected to remain around 6.8% for the rest of 2025.
- April saw a significant increase in home-purchase cancellations, with Florida leading in metro areas with the highest rates.
Redfin, the technology-driven real estate brokerage, forecasts a potential 1% decrease in U.S. home-sale prices by the fourth quarter of 2025. This projection comes amid a continued cooling of the housing market, driven by a rise in inventory and declining sales. The median home-sale price is expected to remain steady through the third quarter before dipping towards the year's end. The shift indicates a notable change from the consistent year-over-year price increases observed since 2012, except for a brief interruption in 2023.
One of the main contributors to this forecast is elevated mortgage rates, predicted to hover around 6.8% until the end of 2025. Factors such as tariffs and the rising U.S. budget deficit are contributing to the persistently high rates. However, a rollback in tariffs could potentially lower rates to between 5% and 5.5%, providing some relief.
Additionally, the report highlights a near-record rate of home-purchase cancellations in April, with around 56,000 agreements, or 14.3% of those that went under contract, being called off. This is the second-highest rate for an April on record since 2017, trailing only the pandemic-impacted April 2020. Economic uncertainty and high housing costs are causing buyers to reconsider, especially in Florida, which has five of the top ten metro areas with the highest cancellation rates.
Homes are taking longer to sell, with sales of existing homes dropping by 1.1% year-over-year in April, reaching a six-month low. On the supply side, total inventory has surged by 16.7% over the past year, while new listings have increased by 8.6%. The combination of a buyer's market and increased affordability due to rising wages is expected to continue influencing the housing landscape through the remainder of 2025.
