Homeownership Market Trends 2025: Key Insights and Forecasts

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Forecasts for home prices look positive. We’ve gathered the key takeaways you need to know about the current market.

Here’s what we’ll cover:

• Why homeownership is still a smart financial move.
• How September’s retail sales impact the economy.

Why Homeownership Remains a Smart Investment

Recent data shows the housing market is holding strong. According to Cotality’s latest Home Price Insights report, home values saw a small sip of 0.3% in August. However, prices were still up 1.3% compared to last year.

ICE Mortgage Monitor’s data for September tells a similar story. It showed a 0.17% monthly increase in home prices after seasonal adjustments. This resulted in a 1.2% annual gain, which is up from 1% in August. This was the first time in eight months that home price appreciation accelerated, signaling renewed market strength.

What does this mean for you? Home prices are driven by supply and demand, and both are currently creating a strong market.

Strong Demand from Buyers

On the demand side, falling mortgage rates have made homes more affordable. In fact, affordability is at its best level in 2.5 years, according to ICE. This has encouraged more buyers to enter the market. We are seeing more contact signings for both new and existing homes. Mortgage application activity has also increased. Many of these buyers were waiting for better conditions, and now they are ready to act.

Tight Supply of Homes

On the supply side, the number of available homes is shrinking. ICE reported a drop in new listings. At the same time, more sellers are taking their homes off the market. With more buyers competing for fewer homes, prices are naturally pushed higher.

Looking ahead, Cotality forecasts a 3.9% increase in home values over the next 12 months. This positive outlook is based on expectations of lower rates, strong buyer demand, and tight inventory.

Real estate continues to be one of the most reliable ways to build wealth over the long term. For instance, a $500,000 home that appreciates at 4% annually would gain $20,000 in value in just one year. This highlights the powerful return potential that comes with owning a home.

Retail Sales Cool in September, But Annual Gains Hold Strong

After two strong months of back-to-school shopping, retail sales slowed down in September compared to August. The National Retail Federation (NRF) reported that five out of nine retail categories saw monthly declines.

Despite the monthly slowdown, year-over-year growth remained solid. All but one category posted gains compared to last year. Online sales, sporting goods, and apparel led the way.

The Fed pays close attention to consumer spending because it is a key indicator of economic strength.

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