With peak homebuying season in full swing, many buyers and sellers are wondering whether housing prices will remain high or finally see a drop in 2025.
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According to J.P. Morgan, this year’s housing market is expected to continue to rise. While slower than in previous years, a number of variables are expected to keep housing prices high, providing an obstacle for many first-time buyers.
Also see Barbara Corcoran’s best advice for first-time homebuyers in 2025.
Housing Prices Expected To Rise 3%
As reported by the global financial services firm, it expects housing prices to rise 3% in 2025. While that marks some growth, J.P. Morgan noted that it is “subdued.” Experts with the company point to low supply and low demand as one reason.
The lack of supply is primarily attributable to people staying longer in their homes because of high interest rates, creating stagnation in the market. If current homeowners cannot afford to move due to high rates, there isn’t as much supply for potential new buyers.
Despite the low supply and demand, J.P. Morgan still expects housing market growth in 2025. “The wealth effect from borrowers with significant home equity and/or equity market growth should maintain positive home price growth, though at a very subdued pace,” said John Sim, head of securitized products research at J.P. Morgan.
Read Next: 5 Types of Homes Expected To Plummet in Value by the End of 2025
Many Experts Concur With Rising Housing Prices
Experts with J.P. Morgan are not the only ones who believe housing prices will rise in 2025. As reported by U.S. News & World Report, the National Association of Realtors and Redfin expect a 3.7% increase in the median existing home sales price in 2025.
Housing prices through the end of the 2020s are expected to rise, although at a slower pace than in previous years due to a lower-than-normal demand. If mortgage rates drop, however, the demand is expected to increase significantly and may allow homeowners who have been unable or unwilling to sell to rethink their decision.
In February 2025, U.S. home prices posted a 3.9% annual gain, as per the S&P CoreLogic Case-Shiller Home Price Indices. The gains were on par with January and December, which posted annual gains of 4.1% and 3.9%, respectively.
What’s Next for Prospective Homeowners?
The outlook remains uncertain for prospective homeowners. CNBC reported on May 21 that mortgage rates are at nearly 7%, and mortgage applications have dropped. However, CNN noted in early March that some locations may be shifting to buyer’s markets, which could spell good news for first-time homebuyers in certain areas.
J.P. Morgan noted that it is hard to determine what impact the second Trump administration will have on the housing markets. Experts with the firm agree that proposals to streamline the zoning approval processes would help to shorten construction timelines, while deporting immigrants lacking permanent legal status may cause labor shortages. There is also consideration that the Trump administration may make federal land available to build more homes, according to the J.P. Morgan outlook.
Measures To Reduce Housing Costs
One of the lingering problems keeping housing costs high is a lack of availability. Lawmakers are taking aim at making homes more affordable in states like California, where housing costs far exceed the national average.
The state faces a housing shortage of 2.5 million, as shown in a March 2025 report by the Assembly Select Committee on Permitting Reform. Only 1 in 6 households can afford a median-priced home in the state. To help more Californian families secure housing, a group of bipartisan legislators put forth over 20 bills to fast-track the housing approval process, making building homes easier and more efficient.
Editor’s note on political 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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Sources
J.P. Morgan, “The Outlook for the US Housing Market in 2025.”
U.S. News & World Report, “2025-2029 Five-Year Housing Market Predictions.”
S&P Global, “S&P CoreLogic Case-Shiller Home Price Indices.”
CNBC, “Mortgage demand drops after interest rates jump to the highest level since February.”
CNN, “The housing market has shifted in favor of buyers — depending on where you live.”
Assembly Select Committee on Permitting Reform, “Final Report – March 2025.”
This article originally appeared on GOBankingRates.com: J.P. Morgan Says Housing Prices Will Rise in 2025 — What Buyers and Sellers Need To Know
