Home Prices Are ‘Not on the Verge of a Nuclear Crash’: Economist Projects Modest Price Gains of 3% in 2025

Article originally posted on HERE on June 3, 2025

National Association of Realtors® Chief Economist Lawrence Yun has said that he believes home sales will pick up in the second half of the year and that national median home prices will grow 3% in 2025.

Speaking at the Realtors Legislative Meetings in Washington, DC, on Tuesday, Yun argued that overall home prices will continue to grow modestly, despite weak sales in the first half of the year and an uptick in seller price reductions.

“Home prices are not on the verge of a nuclear crash,” said Yun, pointing to low levels of serious mortgage delinquencies as a sign that few homeowners will be forced into distressed sales.

Despite weak sales activity in the early part of the year, Yun forecasts existing-home sales will rebound and rise 6% this year compared with 2024, while new-home sales will rise 10%.

His forecast hinges on mortgage rates easing to 6.4% by the end of the year, alongside continued labor market growth with 1.6 million jobs added to the economy across 2025.

So far this year, mortgage rates have remained in a narrow range above 6.6%, according to Freddie Mac.

“The mortgage rate is the magic bullet, and we are just waiting and waiting as to when that could come down,” said Yun.

Still, Yun acknowledged that his expectation for a recovery in home sales volume for the first half of 2025 has not come to fruition.

Sales of newly built homes were down 2.3% in the first quarter compared with last year, although they did make an unexpected surge in April, jumping 3.3% on the year.

Existing-home sales have also remained stuck near or below the sluggish pace of last year, which was the slowest year for home sales in nearly 30 years.

April’s annual existing-home sales pace of 4 million was down 2% from a year earlier, according to NAR data.

“The forecast that’s the most important is not panning out. I thought at this conference I would share some good news with you: ‘Home sales are rising. Momentum is building.’ But we are not seeing that,” said Yun. “The market remains very, very difficult at the moment. … The recovery has been delayed.”

Realto r.co    m® Chief Economist Danielle Hale also spoke at the event, where she highlighted recent research estimating that the nation has a housing shortage of nearly 4 million homes.

“If we want to continue to make homeownership available, especially for younger generations, we need to build more homes,” she said.

Hale also addressed the issue of elevated mortgage rates and highlighted a recent Realtor.com analysis that found that rates for buyers of newly built homes are about a half-point lower on average, due to builder incentives.

She also noted a study last year that identified steps mortgage borrowers can take to secure a lower interest rate, including shopping different lenders.

“Shop around for a mortgage,” advised Hale. “You can save almost an entire percentage point on your mortgage.”