Key Real Estate Trends to Watch

Here’s what likely to reshape the U.S. real estate market over the next six months (August–December 2025):

1. Interest Rates and Mortgage Affordability

• Mortgage rates are gradually easing from early‑2025 highs (6.8%). Some forecasts expect 15‑year fixed rates to drop toward 5.5%, possibly reaching 6% on standard loans.
• This drop could unlock affordability for millions, with NAR estimating that 5.5 million new households might become buyers once rates dip to 6%.
• However, many economists caution rates may remain elevated until 2026, keeping the market constrained this year.

2. Pricing & Inventory Dynamics

• Home‑price appreciation is projected to slow, with national growth averaging about 2% to 3% in 2025—down from 4–5% in 2024.
• Zillow forecasts that home values may actually decline slightly, ending the year about 2% lower than January 2025, particularly as inventory reaches near pre-pandemic norms.
• Inventory is steadily rising: homes are taking longer to sell (avg. 58 days in July, slowest pace since 2017), and builder activity remains muted despite incentives.

3. Rental Market & Shifting Tenant Preferences

• Rising borrow costs are pushing many would‑be buyers into renting. According to a Fannie Mae survey, 35% of consumers now prefer renting over buying.
• Though apartment completions are down 28%, rental supply is tightening while demand remains high. This is expected to drive rent growth of 5–10% annually, especially for single-family rentals.
• Zillow forecasts rent increases of 2.8% for single‑family, 1.6% for multifamily through year‑end – modest in isolation but upward‑trending owing to supply constraints.
• Landlords are already raising rents to offset higher operating expenses, with many expecting to increase rents by around 6% in 2025.

4. Digital Disruption & Listing Systems

• Major brokerages like Compass are increasingly using “exclusive” or pre‑market listings, bypassing centralized MLS systems. This poses the risk of increasing market opacity and favoring well‑connected buyers.
• Adoption of digital tools—from A.I. valuation to property management tech—is accelerating. For instance, upcoming AI‑augmented appraisal standards (UAD 3.6 in 2026) are set to reshape pricing transparency and efficiency.

What This Means for Buyers, Sellers & Investors

Buyers: Slower price growth and rising inventory mean more options—but high mortgage rates still constrain entry. Consider locking in when rates fall closer to 6%.

Sellers: Pricing expectations may need adjustment, especially if your market softens and homes are sitting longer or being delisted.

Renters/Investors: Rental demand is strong. Single-family rental investments may outperform. Watch for rent inflation and tech-driven investment models.

Summary: What to Expect by Year-End

• Home prices: Tepid growth overall; some small declines.
• Mortgage rates: Gradual easing toward mid‑6% or possibly low‑6% range.
• Rental market: Rent growth picking up, driven by demand and tighter supply.
• Inventory: Rising in most regions, easing price competition.
• Listing access: Increased market fragmentation due to broker practices.
• Proptech/A.I. adoption: Growing influence on valuation, marketing, and operations.

As we head into late 2025, real estate markets seem to be transitioning from a near standstill toward a more balanced—but cautious—environment. Watch key signals from mortgage rates, local inventory data, and rental supply to understand when momentum may shift.