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Though many Americans believe the housing market is at risk of crashing, economists who study housing market conditions generally do not expect a crash in 2025 or beyond unless the economic outlook changes.
The National Association of REALTORS® says existing home prices will end the year around $398,700 and that they'll increase to $405,000 by the end of 2025.
Why are economists so sure that home prices won't crash?
"[There's] just simply not enough supply," Lawrence Yun, chief economist at the National Association of REALTORS®, says. "So the economics of supply and demand, if there's a shortage, prices simply cannot crash."
In the mid-2000s, many lenders were offering mortgages to high-risk borrowers without asking for proper documentation. At the same time, home builders were rapidly building new homes to meet increasing demand.
"Home builders were producing right and left, so much home construction," Yun says. "It was one of the most active supply-producing situations. So we had an oversupply."
If you live in a high-cost metro area, moving out of the city can make homeownership significantly more affordable.
"For those who have some flexibility to go further out into the suburbs, exurbs, or even smaller towns, the next county, there's better affordability," Yun says.
The one good spot of news for homebuyers is that mortgage rates are expected to go down in 2025. While Yun says we're unlikely to see a return to the historic lows borrowers enjoyed in 2020 and 2021, the latest forecasts suggest 30-year fixed rates could inch down throughout the next couple of years.