Bank of America Predicts Housing Market Shifts

Homebuyers have had it rough over the past few years, facing an unpredictable housing market with high prices and mortgage rates, making it difficult to buy homes. However, Bank of America forecasts a few crucial shifts coming to the housing market later in 2025 that can improve the situation, Knewz.com has learned.

While mortgage rates remained higher than expected, hurting hopes for a significant recovery in the housing market this year, more homes are currently available to buy, and prices are not rising as quickly. Although the second half of the year is still uncertain, experts are hoping housing conditions will improve and bring an end to years of stagnation in the market.

The year 2025 was expected to bring notable improvements to the market, but inflation, trade tensions, recession concerns and financial instability have kept mortgage rates high, limiting home sales. According to Bank of America’s 2025 Homebuyer Insights Report, while buyers are softening on the housing market outlook, they are still holding out for better conditions. “More than half of prospective homebuyers believe the housing market is in a better position than it was a year ago. And while 75% of buyers expect mortgage rates and housing prices to improve in the next year, they are also holding off on purchasing a home until then,” reports have mentioned. Younger generations would be especially interested in buying a home if mortgage rates fell below 6%. However, Matt Vernon, Head of Consumer Lending, noted that most buyers are still considering buying a home in the future, despite a challenging housing market. “The uncertainty among homebuyers is real, but so is their resilience. … Buyers are navigating a complex environment with rising costs, fluctuating rates and mixed signals, but many are still planning ahead,” Vernon explained.

The housing market has especially been harsh for younger homeowners, particularly Gen Z and millennials, who have to either compromise to find a home within their budget or find a secondary income source to afford housing. More than 90% of Gen Z and millennial buyers had to purchase a home outside of their ideal neighborhood, and 30% of Gen Z buyers had to get a second job to help save for their downpayment, according to reports. Vernon commented in this regard, “Even with the challenges they face, younger generations still understand the long-term value owning a home offers them, and many are doing what it takes to get there. They are finding creative ways to afford downpayments and working hard to improve their financial futures.” However, they are still hopeful that the housing market will turn around soon and are finding ways to tackle homeownership in the meantime.

Nick Gerli, the CEO of the Reventure app and a real estate analyst, recently noted an “alarming” decline in investor demand in the housing market, and the markets affected are witnessing rapidly rising housing inventory and supply, thus resulting in lower home values on a month-to-month basis. Home values are reportedly falling month-over-month in more than 60% of U.S. counties, a decline Gerli compared to the 2008 housing market crash or the 2022 mortgage rate spike. “More than half the country is now officially in month-over-month declines, indicating that the housing downturn is spreading,” Gerli wrote on X. “We’ll have to see if this lasts into the future, and if it turns into a sustained correction like 2008 or is a blip like 2022. But given the trajectory of listings and inventory, it seems like more value declines are coming,” he added. According to the real estate company Zillow, monthly home values have already dropped in 27 out of 50 states this year.

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