How extreme weather, high home prices could affect the 2025 housing market

Published On Jan 21, 2025, 7:00 AM

The 2025 housing market is expected to be adversely affected by extreme weather events, such as wildfires and severe winter conditions, coupled with rising home prices. Recent data from Redfin indicates an 11% drop in homebuyer demand and an 8.4% year-over-year decline in pending home sales. This trend suggests that potential buyers are discouraged due to high prices and extreme weather impacts, leading to a slowdown in the market. As home prices have increased by 5.8% and mortgage rates are at a recent high, this could further limit affordability for buyers. Displaced homeowners due to weather events are increasing rental demands, particularly in areas like Los Angeles, which could impact future trends in both rental and buying markets.