The National Association of Realtors (NAR) has dialed back its optimism for the 2025 housing market. Originally among the more bullish forecasters, the NAR has now revised its projections downward during its latest Quarterly Forecast Summit, citing ongoing affordability concerns and rising mortgage rates.
For buyers, sellers, and investors in Los Angeles, these updated projections offer valuable insight into what to expect this year—and how to plan your next move.
📉 NAR’s 2025 Housing Forecast Revisions at a Glance
| Metrics | Original Forecast (Nov. 2024) | Updated Forecast (March 2025) |
|---|---|---|
| Existing Home Sales | 7%–12% increase | 6% increase |
| Total Existing Sales | 4.9 million | 4.3 million |
| New Home Sales | 11% increase | 10% increase |
| Median Home Price Growth | 2% increase | 3% increase |
| Mortgage Rate (avg) | 6.0% | 6.4% |
🏠 Why the Downgrade?
The biggest factor behind the revision? Affordability pressures. Home prices are rising faster than anticipated, and mortgage rates—though down from their 2023 highs—have remained stubbornly above 6%.
NAR originally predicted just a 2% increase in home prices for 2025, but that estimate has now jumped to 3%, with 4% expected in 2026. This puts more financial strain on buyers, especially first-time homeowners and move-up buyers.
Even new construction—which has remained more resilient than resale activity—is expected to slow slightly. While builder incentives and rate buydowns are still common, NAR now expects just a 10% rise in new-home sales, down from the original 11% projection.
📍 What This Means for Los Angeles Buyers & Sellers
For Homebuyers in LA:
- Don’t expect a price crash. If you’re waiting on the sidelines for a major drop, it likely won’t happen. Even with fewer sales, home prices in Westside Los Angeles, Brentwood, and Pacific Palisades are expected to keep climbing—just at a more modest pace.
- Focus on negotiating. While the forecast is still positive, the softness in pending home sales and increased inventory means more opportunities for buyers to negotiate on price, seller credits, and financing incentives.
- Use creative strategies. Partner with a lender who can help structure solutions like 2-1 buydowns, ARM products, or down payment assistance to stay competitive.
For Home Sellers in LA:
- Be realistic about pricing. Inventory is rising, and although competition is still present in desirable neighborhoods, overpricing will lead to longer days on market and possible price cuts.
- Highlight what matters most. Focus on location, privacy, flexible layouts, and outdoor living—all top priorities for today’s Los Angeles homebuyers.
For Investors:
- Stay selective. The updated NAR projections align with other leading forecasts (Realtor.com predicts 4 million existing home sales in 2025), so while growth is expected, it will be modest. Focus on high-yield pockets, particularly multifamily or new construction in transitioning neighborhoods.
🔍 Bottom Line
This revision from the National Association of Realtors doesn’t signal trouble—it signals adjustment. Forecasts are being calibrated to match what’s already happening on the ground: slower but steady movement, with price growth continuing, and buyers being more rate-sensitive than ever.
The NAR’s projection of 4.3 million existing home sales now mirrors the average among major forecasters, reaffirming a common industry consensus. If you’re buying, selling, or investing in Los Angeles real estate, the key is to move with strategy and insight, not fear or delay.
📞 Contact Abdo Pierre Faissal for unparalleled real estate service.
📧 [email protected] | 📲 310-620-1038
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