I’ve been having a handful of conversations lately—friends, past clients, homeowners—people who have been circling the idea of making a move but feel completely stuck. Some have been casually looking for months, waiting for things to “get better.” Others are just starting to entertain the idea, but aren’t too sure about how realistic it would be for them.

And honestly? I don’t blame them. The last few years in real estate have been a little unpredictable; a little all over the place. But even in a shifting market, people are still buying and selling homes every day—because for the right person, in the right situation, the right move still makes sense.

Rates went up, home prices held steady, and over time inventory has continued to remain tight—not because people didn’t want to sell, but because many felt like they couldn’t.

It’s a pattern I’ve been seeing over and over again: homeowners who bought before rates jumped are now sitting in a house that may not fit their needs anymore, but financially, it’s hard to justify leaving. When you’ve been paying 3% on your mortgage for years, the idea of trading up to a new home at today’s rates—with a significantly higher monthly payment—doesn’t feel great.

And for buyers who have been waiting? It’s been just as frustrating. Fewer homes on the market means more competition, and even as rates are expected to ease, affordability remains a real challenge. That said, smart buyers are still finding opportunities—whether that’s through price negotiations, seller concessions, or new inventory opening up in certain markets.

So where does that leave us now?

Last week, Dr. Lawrence Yun, Chief Economist of the National Association of REALTORS®, shared his latest market outlook, and I’ve been digging into the key takeaways. His insights, along with some telling data points, paint a clearer picture of where the 2025 housing market stands—what’s shifting, what’s staying put, and why it’s still worth understanding your options, no matter what side of the market you’re on.

A Market That Wants to Move—But Inventory Is Kinda Still Holding It Back

For years, jobs and mortgage rates have been the biggest forces shaping real estate. If people felt secure in their income and borrowing was affordable, home sales naturally followed. But in 2025, there’s a third, equally important factor dominating the market—inventory.

Right now, there simply aren’t enough homes to go around. The U.S. is missing about 4 million homes—a supply gap that isn’t going to close overnight. And even though new construction is ramping up, it’s not happening fast enough to meet demand. Builders are focusing on higher-end homes, not necessarily the entry-level price points where buyers need inventory the most.

So why is supply still this tight?

The Lock-In Effect Isn’t Going Away

Homeowners who locked in low mortgage rates a few years ago aren’t rushing to sell—and it’s not just a hunch, the numbers back it up.

35% of homeowners don’t have a mortgage at all—meaning they probably have no urgency to sell.
Another 38.5% are sitting on mortgage rates below 4%—which makes the idea of trading up to a 6%+ rate feel… painful.
And that alone is over 70% of homeowners who aren’t exactly itching to list their home right now.

The reality is, even if someone needs more space or wants to move closer to family, jumping from a 3% mortgage to a 6% mortgage means their monthly payment could be dramatically higher—even for a home that isn’t much bigger or better. That’s keeping a lot of would-be sellers firmly in place.

For buyers, this translates to fewer options, higher prices, and a competitive landscape that doesn’t seem to be letting up anytime soon. Even though we’re expecting some mortgage rate relief in 2025, it’s not an instant fix for inventory.

That being said, there are still homes hitting the market—just not at the volume we’d normally expect. Homeowners who need to move (due to job relocations, growing families, downsizing, etc.) are still listing, and buyers who understand the market and act strategically are still finding success.

Home Prices? Still Rising—Especially in the Midwest

There’s been a lot of speculation about home prices over the last few years. Are they going to drop? Not likely.

In Illinois, home prices increased by 7.1% in just the past year (Q3 2023 – Q3 2024).

And if we take a step back even further, prices have risen 44% since pre-COVID (Q1 2020).

Even with higher interest rates, home values have held strong, especially in the Midwest—and for good reason.

Chicago and the surrounding suburbs have remained a standout in affordability compared to coastal cities like New York, LA, and San Francisco. Buyers who have been priced out of those markets are turning their attention to Chicago, keeping demand steady.

Even as rates fluctuate, people still need homes—and in competitive areas like Chicagoland, well-priced properties are still moving.

Homeowners Are Sitting on Record-High Equity

If you already own a home, here’s something worth keeping in mind: even though affordability is tough for buyers, homeowners have more wealth tied up in their properties than ever before.

Home equity in the U.S. has never been higher—we’re talking over $35 trillion in home equity nationwide. That’s a massive amount of untapped financial power.

Why does this matter? Because it means options.

If you’re a homeowner thinking about moving, you may have more buying power than you realize. Your home has likely appreciated significantly, and the equity you’ve built can make a move more feasible—even with today’s rates.
If you’re a buyer, real estate continues to be one of the strongest ways to build long-term wealth. The gap between homeowners and renters is staggering:

The median net worth of a homeowner: $415,000

The median net worth of a renter: $10,000

That difference isn’t just about home values—it’s about the long-term financial benefits of owning property.

Even in a market where affordability is a challenge, buying strategically, holding onto your investment, and letting appreciation work in your favor can be a game-changer…

The Fed Is Cutting Rates—So Why Aren’t Mortgage Rates Dropping Faster?

Last fall, the Fed started cutting interest rates, and they’re expected to do another 2–3 rounds of cuts in 2025. Naturally, many people assumed this would mean instant relief for mortgage rates. But… that hasn’t exactly been the case. (I bought at the end of 2023, trust me— I understand the pain, haha!)

Here’s the thing: mortgage rates don’t move in a straight line. Even when the Fed lowers rates, long-term mortgage rates are influenced by a mix of factors—inflation, investor confidence, overall economic outlook—and they don’t always react the way people expect.

Translation: If you’re waiting for 4% mortgage rates to magically reappear, you might be waiting a while.

However, all of this is not to say that things won’t improve. Rates are expected to stabilize around 6% in both 2025 and 2026, which—while not as low as we saw in 2020–2021—is still manageable for many buyers. The bigger shift will come when rates drop just enough to convince sellers sitting on ultra-low mortgages to finally list their homes. And this is when we could see inventory start to move more significantly.

The Market Definitely Has Momentum—But There’s Still Some Uncertainty

Even with higher rates and low inventory, the housing market isn’t stalling. In fact, Dr. Yun predicts a 9% increase in home sales in 2025 and another 13% in 2026—a sign that more movement is coming.

What’s likely fueling this momentum:

More homes hitting the market (finally).
Job growth staying strong, with about 2 million new jobs added each year.
Home prices continuing to rise—but at a more moderate 2% annually (instead of the rapid increases we’ve seen in past years).

That said, there are still some big question marks ahead.

Things like rising national debt and potential policy changes could have ripple effects on mortgage rates, buyer affordability, and overall market conditions. We’re in a moment where things are shifting, but it’s not a full market reset—it’s more of a slow course correction.

The key takeaway I want us all to walk away with?

Movement is happening, rates will find their balance, and smart buyers and sellers will keep an eye on the bigger picture—not just short-term fluctuations.

So… What’s the Move?

Well—if you’ve been even remotely thinking about buying or selling, but you aren’t too sure if now is the right time, the truth is: there’s really no one-size-fits-all answer here. Buuuuttt… there IS always a smart move to make.

If you’re buying: Waiting for perfect conditions usually isn’t the winning strategy. Prices aren’t dropping drastically, and when rates do come down (even by 1%), demand will surge—pushing competition (and prices) even higher.

That said, I’m not telling you to buy just because of that. But if you’ve talked with a lender and you know what price point you’re pre-approved for in today’s market—IF you and your Realtor (hopefully me, haha) find a home that fits your needs and makes financial sense—locking it in now could be the smartest move. And if rates improve later? That’s what refinancing is for!

For Sellers: Your home might be worth (way) more than you think. Buyers are definitely still out there. Listing your home today, strategically, with the right pricing and presentation approach matters more than ever.

If you’re in a low-inventory area (like the Western Suburbs), well-prepared homes are getting extremely strong offers— in some cases, multiple. Buyers today are taking their time, running the numbers, and looking for value.

And if you’re someone who’s decided it’s best to simply hold off— I promise, that is totally fair. The market is shifting, and jumping into a big decision when you’re not sure simply doesn’t make sense.

That said, there’s a difference between waiting because it’s the right move for you and waiting just because things feel uncertain. The best decisions in real estate come from having the full picture—understanding your options, knowing your numbers, and making a move when it makes sense for you (not when the headlines say so).

So if you’ve been sitting on the fence, we don’t have to figure it allllllll out today. But I’d love to help you make sense of where you stand. No pressure—just real answers so you can move forward confidently, whenever that may be.

Amanda Lee’s Final Thoughts

Yes, I just referred to myself in third person, lol.

The 2025 market isn’t standing still. I’m with all of you — I’d loveeeee to see rates lower.

They’re higher than we’d like, but homes are still selling, buyers are still buying, and inventory is slowly starting to open up. The reality is, real estate moves in cycles, and the best time to act isn’t when everyone else is—it’s as simple as: whenever it truly makes sense for YOU.

And now is when I cue a lovely wrapping-up pitch, where I tell you how I would love to help you…

My job as a Realtor is never to push anyone into a decision—it’s to make sure that when you do make one, it’s the right one.

So whether you’re buying, selling, or just wanting to figure out potential next steps, please know I am always someone you can talk to. No pressure—just a real conversation about what makes the most sense for you.

Email: amandalee@atproperties.com
Call/Text: (630) 995-0940

The 2025 Housing Market: What I Think Buyers & Sellers Should Know