Investing.com -- The U.S. housing market is expected to see mild improvements in 2025, but elevated mortgage rates and affordability challenges will continue to weigh on activity, according to a Bank of America report.
Affordability remains a key concern. Despite some improvement since 2022, affordability is still near its lowest level since 1985, with median home prices at about four times the median income. As of October, the median U.S. single-family home price was $412,000, while the median income stood at $102,000.
On the bright side, resilient housing demand and gradual wage growth could support the market. BofA forecasts existing home sales to rise to around 4.2 million in 2025, assuming mortgage rates stabilize. The ratio of mortgage payments to rent has also declined, signaling improved conditions in some regions, though renting remains cheaper in 82 of 97 major U.S. cities.