Trends by region

Regionally speaking, according to NAR data, existing home sales fluctuated in 2024, with the South dominating the market. For November 2024, 45% of existing home sales came from the South, a significant number higher than the West (19%), Northeast (12%), and Midwest (24%). Prices also varied wildly by region.

Northeast

• Sales jumped 8.5% from October, reaching an annual rate of 510,000.
• This marks a 6.3% increase compared to November 2023.
• The median price rose to $475,500, up 9.9% year-over-year.

Midwest

• Sales grew by 5.3% in November to an annual rate of 1 million.
• This represents a 5.3% increase compared to the previous year.
• The median price climbed to $302,000, reflecting a 7.3% year-over-year increase.

South

• Sales rose 5.6% from October, reaching an annual rate of 1.87 million.
• This is a 3.3% increase compared to one year earlier.
• The median price increased to $361,300, up 2.8% year-over-year.

West

• Sales remained unchanged in November at an annual rate of 770,000.
• However, this reflects a 14.9% increase from November 2023.
• The median price rose to $628,200, up 4.0% year-over-year.

However, property insurance rates and climate concerns have taken their toll on affordability, and migration patterns have shifted as a result.

A 2024 report titled “Climate Change, Disaster Risk, and Homeowner’s Insurance,” issued by the Congression Budget Office, highlighted the growing costs of insurance premiums and lower insurance payouts in high-risk areas—particularly in states prone to hurricanes and wildfires.

“In 2023, insurers covered $80 billion of the $114 billion of losses attributable to natural disasters, meaning that 30 percent of those losses were not insured,” the report said.

According to HomeLight’s Top Agent Insight Report for 2024, 43% of agents in the South Atlantic confirm that the impact of adverse weather was leading to changes in behaviors around clients buying or selling property.

The growing costs of property insurance in natural disaster-prone states aren’t likely to go away anytime soon. Florida and California have been hit the hardest in recent years, with a record number of carriers discontinuing coverage in those states and surrounding states are feeling the strain.

Economic indicators affecting the 2025 real estate market

The housing market is, of course, only one piece of an ever-changing economic landscape, and its contours depend on adjacent pieces — intertwined factors like inflation and savings rate.

Let’s look at these indicators to understand how they shape the current real estate market.

Inflation

Inflation is a measure of how prices change over time for goods and services people purchase. A certain level of inflation is expected and even healthy in a given year. (The Federal Reserve aims for 2% per year.)

The Consumer Price Index (CPI) evaluates inflation by considering the prices of typical goods and services like gas and groceries. By the end of 2024, the CPI rose 0.4% in December, resulting in an annual gain of 2.9%.

Though inflation has cooled from its massive 9.1% peak in June 2022, home prices are still expected to suffer.

Inflation can affect the housing market in many ways, putting pressure on home prices, home values, mortgage rates, and construction costs.

Savings continue to deplete

At the height of the pandemic in 2020, Americans saved approximately $2.1 trillion as household spending decreased and the government provided stimulus checks and tax breaks. These savings helped fuel the pandemic housing boom, contributing to down payments and closing costs.

However, since then, the personal savings rate, income that people save rather than spend, has dropped to 4.4%, a very slight increase from December of 2023, hitting 4.1%. This is still significantly lower than the average rate of 8.9% seen over the past several decades.

Elevated interest rates and cost of living spikes continue to make it difficult for Americans to put away money each month, and increasing home prices are making it more challenging for them to enter the market as a first-time home buyer or upgrade from a starter home.

According to ATTOM’s fourth-quarter 2024 U.S. Home Affordability Report, home prices are reaching record levels of low affordability.

“Home ownership is less affordable in the fourth quarter of 2024 compared to historic averages in 98.2 percent of the 566 counties analyzed. That is about the same as the level in both the third quarter of 2024 and the fourth quarter of last year, but more than 20 times higher than the 4.6 percent portion in the first quarter of 2021,” the report said.

Likewise, while home sellers might be getting larger returns on their property, first-time buyers can’t even get a foot in the door as wages can’t keep up and down payments are ballooning.

“The U.S. housing market continues to generate great profits for most home sellers but also more and more financial stress for would-be buyers. Average workers now must shell out a larger portion of their wages for major home-ownership expenses than at any time since right before the housing market tanked in the late 2000s,” said CEO of ATTOM, Rob Barber.

“Despite recent declines in mortgage rates, down payments on typical home purchases have reached four times the average national wage,” he added.

Historic NAR settlement changes home-buying

In mid-2024, the National Association of Realtors experienced a massive shakeup following a settlement that would change commission rates and how homes are sold nationwide. These changes were intended to “decouple” seller and buyer agent compensation.

Industry experts predicted that this decoupling will likely lower agent fees and allow buyers to negotiate commission amounts directly.

Did that happen? Agents surveyed by HomeLight expressed frustration with the changes, particularly when it came to educating buyers and sellers, which led to more confusion amid an already frustrating marketplace.

“Some clients know nothing about it at all. Some feel the 3% to the listing agent, or whatever they agreed upon for the listing agent, is all they are going to pay. This shuts out a lot of first-time homebuyers,” Dorene Phan, a Michigan-based agent, told HomeLight in our Top Agents Insight Report for 2024.

What should you do?

As we’ve seen, the 2024 real estate market was tough, and 2025 might face similar obstacles. Mortgage rates, inventory, and home sales aren’t likely to improve much, and home prices are expected to increase. However, you do have options, and HomeLight is here to help.

If you’re thinking of throwing your hat into the ring — whether as a buyer, a seller, or both — here are some tips to help you manage the current real estate market.

Connect with a Top Agent

Regardless of market conditions and whether you’re buying or selling a home, working with a top real estate agent can be key to achieving your goals.

Find Agent

Tips for home buyers in 2025

• If you have flexibility, expand your search area to more affordable regions. Try this tool from NAR to learn more about affordability in a specific state or metropolitan area.
• If a low inventory is a problem in your market, consider a fixer-upper instead of a turn-key property.
• To get a lower interest rate — especially if you’re planning to stay in the home for less than five years or so — consider an adjustable-rate mortgage (ARM). While ARMs have higher lending standards, they come with lower introductory rates than fixed-rate mortgages and are typically locked in for a period of five to 10 years. After that, the interest rate will fluctuate.
• If you plan to buy and sell a home this year, HomeLight’s Buy Before You Sell program can help you unlock your equity to make a strong offer on a new home before selling your current home. You can move on your schedule and list your home vacant — it’s a win-win.

Tips for home sellers in 2025

• Work with a top agent to guide you along the way. We’d love to connect you to someone with a track record of satisfied clients. Our service is completely free, and in two minutes, we’ll recommend the best agents near you.
• Make high-ROI improvements before you list your home to make it more attractive to potential buyers. 88% of agents we surveyed said that modernized bathrooms and kitchens are the top upgrades sellers can add to their homes.
• Work with your agent to set a competitive list price for your home. Our survey indicates that overpriced homes and lack of concessions are the top deal-breakers for buyers in the current real estate market. To get an idea of what your home is worth, check out HomeLight’s free home value estimate.

If you’d rather not go through the work of listing your house, consider requesting a cash offer from HomeLight’s Simple Sale platform, which provides cash offers for homes in almost any condition across the nation. You can skip repairs, staging, and showings.

Instead, tell us a bit about your home and your selling timeline, and we’ll send over a cash offer in as few as 48 hours. With Simple Sale, you can also compare your offer to an estimation of what you’d fetch on the open market.

Writer Hayley Abernathy contributed to this article.

Header Image Source: (Chris Norberg / Unsplash)