As we move into 2025, uncertainty around interest rates remains a key concern for prospective homebuyers and sellers. While the Federal Reserve is likely to maintain the current benchmark interest rate between 4.25%-4.50%, many are wondering how the housing market will perform under these conditions. However, there is a silver lining for consumers who remain concerned about affordability and rising rates.
According to Zillow's CEO, the housing market's primary challenge in 2025 is not high interest rates, but a shortage of inventory. This tight supply is expected to keep housing demand stable, even as borrowing costs remain elevated. The market is shifting toward creative solutions to attract buyers, especially in the new home sector.
Leading homebuilders, like DR Horton, have adapted to these challenges by offering incentives such as rate buy-downs to offset high borrowing costs. These builders are focusing on producing smaller, more affordable homes with bonus features and incentives to attract buyers. Despite higher mortgage rates, new home sales remain relatively strong nationwide due to these strategies.
For private sellers, this raises the question: How can they compete in such a market? Sellers may need to adopt similar tactics, offering added value or negotiating perks to close deals.
The Trump administration is expected to influence several economic levers that could impact the housing market. By potentially reducing regulations on financial institutions, we could see increased lending activity, which would stimulate more real estate transactions. At the same time, Trump's aggressive trade and immigration policies may introduce uncertainties that affect consumer confidence. Banking industry experts suggest that loosening regulations could boost loan demand, even in the face of fluctuating interest rates, providing a counterbalance to potential uncertainties from Trump's trade and immigration policies.
While national trends point to slower growth, North Carolina's housing market—particularly in metro and coastal areas—stands out as an exception. The state benefits from robust demand driven by its strong military presence, hospitality industry, and available land for development.
Let's take a closer look at some key markets in coastal North Carolina, where the housing market remains resilient:
These local markets reflect stronger performance than the national averages, with steady demand despite higher borrowing costs.
Nationally, the average home price stands at $416,100, with properties spending an average of 53 days on the market. While higher interest rates have slowed activity in some regions, these figures indicate that opportunities remain for buyers and sellers willing to navigate the current landscape.
In conclusion, while interest rates may remain high throughout 2025, housing market fundamentals—such as inventory shortages, new construction trends, and regional demand—will continue to shape a resilient market. With creativity and flexibility, both buyers and sellers can still find opportunities in this evolving market.
Zillow CEO Commentary on Inventory vs. Interest Rates
Zillow Group, Inc. (2025). Zillow’s Outlook on the 2025 Housing Market. Retrieved from https://www.zillow.com/research/.
DR Horton Home Building & Sales Tactics
DR Horton, Inc. (2025). Building Strategies for 2025. Retrieved from https://www.drhorton.com/.
Reuters Article on Fed's Interest Rates & Trump’s Policies
Reuters. (2025, January 29). Fed Likely to Keep Rates Steady as It Awaits More Data, Clarity on Trump Policies. Retrieved from https://www.reuters.com/markets/rates-bonds/fed-likely-keep-rates-steady-it-awaits-more-data-clarity-trump-policies-2025-01-29/.
National Real Estate Averages
National Association of Realtors. (2025). December 2024 Existing-Home Sales Data. Retrieved from https://www.nar.realtor/.
Local NC Real Estate Data
Realtor.com. (2025). Real Estate Data for Wilmington, Sneads Ferry, Holly Ridge, Jacksonville, Hampstead, and Topsail Island, NC. Retrieved from https://www.realtor.com/.