Inventory growth and borrowing costs weigh on price appreciation, says CoreLogic
The outlook for US home price growth in 2025 has softened due to rising inventory levels and high mortgage rates, according to CoreLogic's latest forecast.
While national home prices appreciated 3.4% year-over-year through October 2024, CoreLogic now predicts a slower rate of 2.4% growth in 2025.
“This year’s housing market saw pretty strong home price appreciation, averaging over 4%. However, 2025 is expected to see a slowdown in price growth,” said Selma Hepp, chief economist at CoreLogic.
CoreLogic initially had higher expectations for 2025 price growth, but the combination of increased housing inventory and persistently high mortgage rates has led to a revised forecast.
“We did start off the year with higher expectations (for price growth) for 2025—now we have lower expectations,” Hepp said in an interview with ResiClub. “It’s a function of higher mortgage rates and inventory levels going up. Rising inventories stall the rate of home price appreciation.”
The forecast is based on a “long-term reversion to the mean”, meaning home prices are expected to gradually align with historical growth averages. However, factors such as income growth disparities and elevated borrowing costs are expected to temper momentum.
The spring homebuying season of 2025 is projected to experience nearly flat year-over-year price growth, with appreciation in the range of 1% to 2% later in the year.
“When considering home price appreciation, it’s important to remember where prices were last year, especially during the spring homebuying season. There was a significant amount of appreciation during that time,” Hepp says. “On a year-over-year basis, the spring homebuying season is expected to see almost flat growth, before picking up again later in the year, with appreciation in the range of 1% to 2%.”
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Despite limited expectations for a significant increase in sales transactions in 2025, Hepp suggests that a more robust recovery could occur in 2026, provided mortgage rates decline and stimulate buyer demand.
CoreLogic’s 2025 forecast aligned conservatively with broader industry predictions. Among the 16 forecasts tracked, the average projection for home price growth is 3.5%. While these estimates vary, the consensus points toward a year of slower, but still positive, growth in home values.
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