Year-End 2025 Real Estate Market Insights
By Steve Slavin, REALTOR
As 2025 comes to a close, I always enjoy looking back at the predictions the experts made early in the year and seeing how many of them actually played out. This year, the big themes were improved inventory, lower interest rates, and a slowdown in both sales pace and price appreciation—and, for the most part, all of that happened.
One of the biggest drivers behind the easing in mortgage rates was the shrinking spread between the 30-year mortgage and the 10-year Treasury, which narrowed to around 2.1%. Without that shift, we wouldn’t have seen rates dip toward 6%. As I’m writing this, the Federal Reserve is meeting again, and we could still see further reductions.
Only 28 out of every 1,000 U.S. homes changed hands in 2025—the lowest turnover rate in at least three decades [Redfin]. Turnover is different from tenure; it measures home sales relative to population growth. Low turnover this year came down to three things: affordability pressures keeping buyers on the sidelines, sellers holding tight to their low pandemic-era mortgage rates, and general economic uncertainty. When people feel uncertain, they delay major purchases—housing included.
But even in a slow year, homes still sell. Over 4.06 million homes changed hands in 2025. That’s 11,123 per day… 463 per hour. [NAR] Headlines often scare more than they clarify, but the truth is the market is moving—and improving. Here’s why I believe housing is on the road to recovery:
- Mortgage rates have been trending down and are lower than we’ve seen in a couple of years.
- The lock-in effect is easing, which is encouraging more homeowners to list and bringing inventory back toward normal levels.
- Lower rates + more choices = more buyers re-entering the market.
Affordability also reached its best point in more than 2½ years this fall, thanks to easing rates and a softening in price growth. Monthly payments are trending down as well, helped by wages rising at a faster pace. The median payment now sits around $2,530. [Redfin, The Fed].
Affordability always comes back to three factors: interest rates, home prices, and wages. Prices aren’t climbing at the breakneck pace we saw during COVID, but affordability is still one of the biggest challenges facing buyers nationwide—and it’s a topic you’ll continue to hear a lot about.
As of mid-September, with 30-year rates at about 6.26%, it required roughly 30% of median household income to cover the principal and interest on a median-priced home. That’s down from over 32% this summer and down significantly from the 35% peak in late 2023 (per Intercontinental Exchange).
The lock-in effect continues to weaken as life takes over. As Redfin’s Chen Zhao said, “More homeowners are deciding it’s worth moving even if it means giving up a lower mortgage rate.” Life doesn’t pause—people change jobs, families expand, folks downsize or retire, and sometimes you just want a different neighborhood. Notably, the share of homeowners with mortgage rates at 6% or higher is now at a 10-year high.
Inventory is rising as well. Purchase applications dipped slightly week-to-week but remain about 20% higher than the same time last year. With more buyers stepping back in and more homes available, sales are expected to climb. The 2026 forecast currently sits at 5.239 million homes sold. [MBA, NAR]
A few final stats for the year:
- 63 days is the current average Days on Market nationally.
- Rates are trending down. [Freddie Mac]
- Monthly payments are trending down.
- Price reductions are up: about 20% of U.S. listings had a reduction; in Indiana, it’s closer to 27%. [realtor.com]
- 2026 home price forecasts: anywhere from +4% to –0.3%, with an overall average of about +1.7%.
The bottom line: the market is rebalancing. It’s not the frenzy of 2021 and not the freeze of 2023. It’s simply becoming more normal again—and that’s great news for both buyers and sellers heading into 2026.
Here's to a great New Year! My team is here to help! -- Steve
