2025 Housing Market Predictions: National Trends & Spokane Outlook

As 2024 wraps up, it’s time to dive into what we can expect in 2025 for the housing market—both nationally and right here in Spokane, WA. From home prices and interest rates to sales predictions, here’s a complete breakdown of the trends you need to know if you’re buying, selling, or investing next year.

Reflecting on 2024

This past year has been one of the most challenging in recent memory, characterized by:

• Emotional Market Conditions: Sellers struggled with declining equity after years of rising values, while buyers grappled with affordability issues.
• Historic Lows: National home sales are projected to end 2024 at 4 million, the lowest since 2008.
• Spokane’s Sales Decline: Local home sales will likely close around 6,775 units—marking the lowest since 2013.

2025 Predictions for Home Sales

Nationally, experts anticipate a 5% increase in home sales for 2025, reaching 4.2 million units. However, this is still well below the two-decade average of 5.15 million.

Spokane Forecast

• Realtor.com Projection: Spokane home sales may decline by 2% next year due to ongoing inventory shortages and affordability challenges.
• Local Insight: I predict a modest 3% increase in sales, but we’ll remain under the 7,000 mark for annual transactions.

“We’re in a slow recovery, and it may take until 2027 to return to average levels of around 8,000 homes sold annually.”

2025 Predictions for Home Prices

Nationally, home prices are expected to rise by 2.6% on average, with conservative estimates from organizations like NAR forecasting 2% annual growth over the next two years.

Spokane Outlook

• Realtor.com Prediction: An aggressive 8.7% increase in Spokane home prices—a bullish forecast.
• Local Insight: I believe Spokane’s housing appreciation will remain steady but moderate at around 2-3% annually. While we’ve already seen substantial appreciation this decade, prices will likely stabilize:
  • Spokane’s home prices doubled from 2017-2023 in just 5.9 years—far faster than most markets.
  • Moving forward, price growth will slow but remain consistent due to ongoing demand and inventory constraints.

Affordability: Where Will Home Prices Land?

• Milestone: I believe 2024 was the last year we’ll see Spokane home prices dip below $400,000, even on a seasonal basis. Moving forward, prices will remain firmly above that mark.
• Why? Rising construction costs, energy efficiency codes, and infrastructure requirements are driving up prices, even for new builds:
  • Builders like Lennar and others are passing on costs for road upgrades, zoning changes, and new energy codes.
  • For instance, homes in Whitetail Ridge are expected to cost $70,000 more in Phase 2 due to Washington’s new energy regulations.

Interest Rates: Will Relief Come?

Interest rates have dominated headlines all year. Many buyers hoped for significant declines in 2024, but those expectations have tempered.

• Federal Reserve Impact: Remember, the Fed’s interest rate decisions don’t directly control mortgage rates. Rate drops often reflect economic uncertainty, which can actually push mortgage rates up due to bond market reactions.
• 2025 Projections:
  • Experts, including Redfin, expect average rates of around 6.5-6.8% for the year.
  • The “mid-5%” range once hoped for seems unlikely in 2025.

“Home prices will likely rise further, and rates aren’t expected to drop significantly. If you’re waiting for both to improve, you may be waiting a while.”

Rental Market Trends

• Stabilizing Rents: Spokane’s rental vacancy rates have surpassed 5%, signaling a softening market. New apartment developments are increasing supply, flattening rental prices.
• Advice for Renters: Now is a great time to negotiate with landlords. If you’re a strong tenant, don’t be afraid to negotiate lower rent or better terms.
• Investor Opportunity: The growing rental market presents opportunities for investors, particularly in multi-family properties.

Key Takeaways for Buyers

• Affordability Remains Challenging: Spokane is becoming increasingly unaffordable for first-time homebuyers. If you’re buying in 2025, focus on saving for a strong down payment to protect against potential equity loss.
• “Marry the Payment”: Instead of waiting for rates to drop, buy a home with a payment you’re comfortable with today. If rates improve, refinancing is always an option.

Summary: 2025 Spokane Market

• Home Sales: A slight recovery, but we’ll remain below 7,000 annual sales.
• Home Prices: Steady growth of 2-3%, with prices remaining above $400,000 year-round.
• Interest Rates: Expect mortgage rates around 6.5-6.8% for most of the year.
• Rental Market: Flattening rents and increasing supply favor tenants and investors.

If you’re planning to buy, sell, or invest in Spokane next year, strategy and preparation will be key. As your local real estate resource, I’m here to guide you every step of the way.