The real estate market goes through cyclical changes for each season. Although winter, spring, summer, and fall have general trends year in and year out, specific economic and market circumstances in a particular year can also affect seasonal trends. Buyers and sellers looking to enter the real estate market in Spring 2025 should prepare themselves for what to expect.
Changes in Buyer Activity
The spring season tends to see an increase in buyer activity from the winter as various factors encourage more buyers into the market, such as warming weather that allows buyers to get out to view more homes. Buyers with school-age children may begin their search in the spring, hoping to secure a new home in time for the following school year. Sellers may also prefer to enter the market in the spring as the improved weather and blooming plants and trees can give their homes better curb appeal.
However, various economic factors in 2025 may dampen buyer activity compared to historical trends for the spring. Buyers in 2025 still must contend with elevated home prices and interest rates, which can adversely affect affordability. The federal government’s new tariff policies may risk significant consequences for the national economy that could push buyers out of the market due to pressures on household finances or increases in unemployment. Overall price increases due to raised tariffs can also adversely affect the real estate market through factors such as constrained inventory. Fortunately, encouraging signs such as slowing or reversed increases in home prices may enable buyers to enter the market.
Shifts in Home Prices
Although housing prices remain elevated compared to other economic factors, such as family incomes, recent data suggest that price increases have slowed or, in some metro areas, reversed. For buyers who can afford homes at prices that remain near historical highs, the recent downward trend in home prices may give those buyers some leverage during negotiations. For example, buyers may no longer face bidding wars that increase purchase prices well above asking prices or sellers who demand buyers waive critical protections like housing inspections or closing contingencies. Instead, buyers may find sellers willing to offer incentives like covering closing costs, making repairs, or contributing to temporary discounts on mortgage rates.
Inventory Levels
Economic factors in 2025 may place downward pressure on inventory levels in the real estate market. For example, continued high interest rates may discourage some current owners from selling their properties, as doing so would require them to move and potentially take on a mortgage or increase their interest costs in a new mortgage. Recent increases in tariffs may also affect new home inventory levels as the cost of home-building materials increases; for example, a significant portion of U.S. lumber supply comes from Canada. Although housing supply has increased for Spring 2025, low inventory under historical standards may keep housing prices elevated, which may continue to price many potential buyers out of the market.
Mortgage Rates and Home Affordability
Home buyers have had to deal with elevated mortgage rates for the past few years as the Federal Reserve has imposed higher interest rates to deal with inflation. Although the Federal Reserve has signaled a reduction in interest rates for 2025, economic challenges may lead the Fed to change those plans. The combination of increased mortgage rates and high home prices from limited supply may price some buyers out of the market for Spring 2025.
Contact a Real Estate Attorney Today
Are you planning to enter the real estate market this spring as a buyer or seller? If so, you can make the process less stressful and more successful by working with an experienced real estate attorney. Contact Willcox, Buyck & Williams, P.A. today for an initial consultation about taking advantage of real estate market conditions this spring.