According to the California Association of Realtors (C.A.R.), 2025 is looking to be a year of opportunity for the housing market, with home sales and prices expected to rise. Buyers and sellers appear to be returning to the market as lower interest rates and better housing supply conditions increase. For those curious about what next year’s market will look like, California Builder Services is here to provide you with all the necessary information to make an informed decision on buying or selling.
Home Sales
The California Association of Realtors predicts a 10.5% increase in home sales in 2025, with around 304,000 single-family homes expected to change hands, an increase from the projected 275,400 in 2024. This means more buyers will be actively looking for homes, but competition could intensify, especially in desirable areas like Los Angeles, San Francisco, and Palm Springs.
The housing supply is expected to increase slightly, with active listings projected to increase above 10%. This will help keep the market competitive while driving prices higher. According to Fannie Mae, the Mortgage Bankers Association (MBA), and the National Association of Realtors (NAR), total home sales are forecast to climb slightly, with an average of about 5.4 million homes expected to sell in 2025. Preparing now will give you a competitive edge!
Home Prices
The median home price in California is projected to rise by 4.6% to $909,400 in 2025. This aligns with 2024, as prices were expected to increase by 6.8% to $869,500. This upward trend is a result of housing demand and a still-limited supply of homes. For those considering preparing your home for sale, this price growth represents a great opportunity to maximize your return on investment (ROI).
Homebuyers
If you plan to buy a home, next year is looking very positive. Interest rates are expected to ease, dropping to an average of 5.9% for a 30-year fixed mortgage in 2025. This will be the lowest rate environment seen in over two years, making home ownership more affordable for many, especially first-time buyers.
While the number of home sales is expected to increase by around 10% next year, the housing supply will still be below historical norms. The number of homeowners kept in place by the lock-in effect is expected to decrease as rates fall, making more sellers able to list their homes. As more buyers enter the market, planning ahead can help avoid the competitive rush.
Take Advantage, Act Now!
Looking ahead to 2025, the housing market is prepared to be revitalized by improved mortgage interest rates and a growing housing inventory. Whether you plan to buy or sell, contacting your realtor to begin planning early will ensure that you’ll be ready when the market shifts. For sellers, this could mean renovating and preparing your home for listing to get the attention of buyers. For buyers, examining the landscape and locking in on favorable rates can place you ahead of the competition when properties hit the market. By acting now, you can capitalize on the 2025 housing market and get a head start on your next big move.
