Rachel Cruze’s 2025 Housing Market Predictions — and What They Mean for Homebuyers
Written by
Heather Altamirano
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Jenna Klaverweiden
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Over the last few years, the housing market has been an unconventional mix of high interest rates, skyrocketing prices and low inventory. But that’s not all that’s made it hard for buyers. The lack of available housing caused costly bidding wars, making it much more difficult to own a home. While it’s been challenging for homebuyers, there could be changes next year.
In a recent article on Ramsey Solutions, Rachel Cruze, No. 1 New York Times bestselling author and financial expert, gave her predictions for the housing market in 2025. Here are six key takeaways.
Also see 10 cities where home prices are expected to drop the most over the next year.
Lower Interest Rates
High interest rates were just one of the many hurdles homebuyers faced this year, but the Federal Reserve slashed interest rates three times this year, bringing the range to 4.25% to 4.5%. In September, the Federal Reserve cut the interest rate by half a percentage point for the first time since 2020. In November, the Fed reduced the rate by a quarter of a percentage point and another quarter of a percentage point in December.
Cruze believes mortgage rates will continue dropping in response. “Even though we may be a long way from rates returning to the 2-3% range we saw at the end of 2021, it’s still great to see things trending in the right direction,” she said.
Slowly Increasing Inventory
Limited options have made house shopping that much more stressful for many, but things could be looking up. According to Realtor.com’s November housing report, active home listings increased by 26.2% in November compared with the same time the previous year. Meanwhile, there has been growth for the last 13 consecutive months.
Things are moving in a promising direction, but Cruze warned to be cautiously optimistic.
“Now, while inventory is increasing, it’s still nowhere close to pre-COVID levels,” she stated. “So you shouldn’t get your hopes up about seeing any kind of major price adjustment. But this is still a great sign because it means the market is getting healthier overall.”
No Housing Market Crash
Fears of the market crashing have been looming, but according to Cruze, don’t expect that to happen.
“Prices are not going to start drastically going down anytime soon,” she explained. “In fact, the Federal Home Loan Mortgage Corporation expects prices to grow in 2025. The main thing to know about the housing market is that home prices are determined by inventory (also known as supply) and demand.”
Not a Buyer’s Market
When supply exceeds demand and buyers have an advantage over sellers, that’s a buyer’s market. Prices tend to stay low as a way to attract and entice buyers, but it hasn’t been a buyer’s market for a few years. And according to Cruze, it will likely stay that way with low inventory.
“The good news is, the market isn’t as hot as it was in the past few years,” she explained. “If you’re looking to buy, you’ll have a few more options — and maybe less competition. Yes, prices are still high, but the frenzy is slowing down.”
Still a Seller’s Market
With the high demand for homes and lack of inventory, sellers have the upper hand and can rake in the benefits of the market that’s in their favor.
“If you’re planning to sell your house, you can expect to sell it pretty quickly and for close to your asking price — as long as your asking price is fair for the current market,” Cruze wrote.
Lower Foreclosure Numbers
There was a 13% decline in foreclosures in the third quarter of 2024, according to ATTOM Data, which is important to know as a homebuyer and seller. And Cruze expects that trend to continue in 2025.
For buyers, it won’t be as easy to find a good deal on a foreclosure since there are not as many. For homeowners, Cruze noted that “the market isn’t going to get flooded with foreclosures,” so home values won’t decrease because more houses are hitting the market.
Don’t Stay on the Sidelines If You’re Ready
While it’s a seller’s market, that isn’t a reason to stay on the sidelines if you’re ready to buy. “The market shouldn’t determine your decision to buy a house,” Cruze said. “If you’re prepared financially, then it’s a good time to buy a home — even if inventory is limited and interest rates are high.”
If you are not debt-free, don’t have emergency savings for three to six months or won’t have a monthly payment that’s 25% or less of your salary, Cruze does not recommend buying, “even if there’s plenty of inventory and rates are down.”
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