These 8 charts show what bubble-spotter Ivy Zelman thinks will happen in the US real-estate market after the least affordable year since 1984

• Last year was the toughest for entry-level home affordability in four decades.
• Prospective buyers have reasons to be hopeful, but mortgage rates aren't among them.
• Here's what top real-estate analyst Ivy Zelman thinks will happen in 2025.

The US real-estate market is bound to have a better year in 2025 after a historically horrible stretch for housing affordability, but those looking for major improvements may be disappointed.

Entry-level home affordability reached a 40-year low last year, according to data compiled by Zelman & Associates, the real-estate research firm led by famed analyst Ivy Zelman.

2024 was the worst year for entry-level home affordability in four decades, according to Zelman & Associates (@zelmanZreport ). Planning to talk with Ivy Zelman about this next week for @BusinessInsider pic.twitter.com/Hvafi23pJT— James Faris (@JamesFaris_) January 17, 2025

Would-be homebuyers were battered by exorbitant property prices and mortgage rates. Although both aspects of affordability improved modestly from peak levels, it wasn't enough to give home sales a meaningful jumpstart.

Younger generations who didn't already own property had it toughest. First-time homebuyers made up less than a quarter of purchases, Realtor.com found — the lowest rate since 1981. Housing analysts are likely sick of references to the 1980s, which was one of the toughest times on record for home affordability.

The new year often brings optimism, and 2025 is no different for those hoping to buy a house.

But it may be best to stay patient, based on year-ahead projections from Zelman and her team. Their estimates for mortgage rates, home sales, prices, and supply in a January report indicate that the year ahead will be better in many ways than 2024, though still full of headaches.

Heeding Zelman's calls has historically paid off. Nearly 20 years ago, Zelman was famously skeptical about the housing market. Shortly after came the housing bubble and financial crisis. She also warned of higher home insurance costs this summer due to rising global temperatures, before the devastating California fires that some observers say are climate change-related.

Below are eight charts from Zelman's report showing what's next for US real estate, which includes the housing and rental markets.

1. Mortgage rates stay stuck high

Many of last year's upbeat predictions about the housing market, including from Zelman, centered around declining mortgage rates. The 30-year fixed rate had tumbled from 7.8% in late October to 6.6% by New Year's, and analysts said it would fall further as interest rates dropped.

Rates then reversed higher through April to 7.2%, which was a major surprise for Zelman. The unexpected jump in borrowing costs postponed sales, though it looked like a blip once rates trended lower through the summer and into the early fall.

But in the last four months, rates have steadily risen back to highly restrictive levels. The US economy is even healthier than expected, and investors think President-elect Trump will usher in even stronger growth and potentially higher inflation.

Either way, markets are counting on higher-for-longer rates, as is Zelman. She thinks rates will be roughly flat this year and sees the 30-year hovering around 6.7% before slipping to 6.5% in 2026. That means buyers shouldn't hold their breath for lower borrowing costs.

2. Home sales march higher

Elevated mortgage rates are a dealbreaker for many buyers and unacceptable for others.

About three-quarters of current owners have mortgage rates below 5%, Zelman's firm found, and over half (56%) are locked into rates lower than 4%. It's no wonder why they're reluctant to swap that rock-bottom rate for a 7% mortgage.

However, those who need to move may decide they can't wait any longer, given that rates may stay near current levels for years.

Both new and existing home sales should rise about 5% next year in a healthy economy, in Zelman's view. A year ago, and last April, she thought sales would surge 8% in 2025, which reflects how higher-than-anticipated rates are weighing on demand.

3. Existing home prices rise at a modest pace

Homeowners are already reluctant to move, so it stands to reason that they'll hold out for higher prices. Properties already on the market should sell for about 3% more than last year, according to Zelman & Associates, though that's below last year's rate and the expected figure for 2026.

4. New home prices inch up

A glut of new homes entering the market will keep prices at bay, Zelman and her team say. They expect freshly made properties to sell for 1% more than in 2024, following a year of flat prices.

5. Single-family rent growth stays in check

On the rental side, Zelman thinks landlords will still score price hikes, though at much lower rates than in the mid- and post-pandemic boom.

Rent growth should fall below 3% for single-family units for the first time in a decade, as rising inventory means that the occupancy rate isn't nearly as stretched as it was a few years ago.

6. Multi-family rent growth remains below-trend

Rent for multi-family units, which includes apartments, will also stay subdued, Zelman's firm said. Rent in these setups may drift north of 2%, but that's still well below levels from the 2010s.

7. Rent hikes will trail wages again

The silver lining for renters is that these increases shouldn't break the bank. Wage growth outpaced rent growth last year for the first time since at least the mid-2010s, according to Zelman & Associates, and the trend should continue this year and into 2026.

8. Multi-family supply growth slows but stays strong

There's a simple reason why rent growth isn't budging much: tenants increasingly have options since apartment supply is soaring.

Last year saw the ninth-biggest increase in multi-family inventory in the last five decades, Zelman and her peers noted. Over 600,000 new multi-family setups went online in 2024, and while that figure may fall this year, it still should be a big year for apartment construction.

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