2025 U.S. Real Estate Predictions
Zillow predicted a more active market with additional inventory for 2025, giving buyers more room to negotiate. However, homebuyers should expect some turbulence with fluctuating mortgage rates, even as more homes become available. Alana Mann, President of The Statesman Group of Companies, joined LiveNOW from FOX to discuss.
A new study reveals that more people are starting to fall behind on their mortgage, as costs that come with buying a home, such as taxes and insurance, rise faster than many people can keep up with.
“The monthly bill that was once predictable is now anything but,” Cotality, a data and technology company, said in their report published on July 10.
Data and technology company Cotality analyzed data from its Cotality True Standings Servicing products consisting of about 40 million loans. Serious Delinquencies were considered loans that were 90 days or more past due, including those in foreclosure. Delinquency rates were the percentage of the count of active loans in the time period.
Homeowners are Falling Behind on Mortgage Payments, Study Shows
By the numbers:
According to Cotality’s data, serious mortgage delinquencies fell steadily for more than three years until 2024 when the trend turned.
In the first quarter of 2025, the average national property tax delinquency rate — which means homeowners were at least one month behind on payments — was at the highest point since 2018.
The company found that almost half of U.S. states saw a slight uptick trend in mortgage delinquencies, and some states saw significant upticks.
Southern States See Significant Increases in Mortgage Delinquencies
Dig deeper:
The data found that Florida, South Carolina and Georgia had the highest change in the year-over-year overall serious delinquency rate.
Aerial view of houses. (Credit: John Keating/Newsday RM via Getty Images)
To note, these states have also faced considerable natural disasters, contributing to higher insurance costs.
While it’s not always the case, the study found that states with the largest increases in escrow payments due to rising taxes or insurance costs often exhibited higher delinquency rates.
In Florida, property taxes jumped nearly 50% over five years, and Cotality projects those costs will continue to rise over the next five years.
What they’re saying:
“As a result, the average escrow payment, which typically covers taxes and insurance, rose 62% in last 5 years. That’s on top of a mortgage. And that’s money many households simply don’t have,” Cotality wrote.
Meanwhile, in South Carolina, 14 insurers ran out of funds between 2020 and 2023. When insurers leave, premiums go up. For homeowners, that means paying more to stay in the same place. Georgia, meanwhile, saw property taxes jump more than $700 on average in just five years.
“The last 10 years have seen home prices, homeowners insurance, and property taxes surge across the U.S.,” Cotality economist Archana Pradhan said in a statement. “These rising costs reduce affordability for new buyers and squeeze existing homeowners’ budgets, often leading to payment difficulties and delinquencies.”
Over half the states with the highest rates of delinquency also had unemployment rates above the national average.
Top 10 States with Highest Change in Year-Over-Year Overall Serious Delinquency Rate
- Florida
- South Carolina
- Georgia
- Nebraska
- Texas
- North Carolina
- Louisiana
- Colorado
- Indiana
- Oklahoma
Thanks to Mortgage Rates, Homeowners Aren’t Selling
Dig deeper:
More than half of homeowners in the U.S. said they wouldn’t be comfortable selling their home this year, no matter how low the mortgage rates go, according to another recent survey from Bankrate.
A similar number of homeowners also said they wouldn’t be comfortable purchasing another home, even if mortgage rates go down.
RELATED: Most homeowners won’t even consider selling this year, thanks to mortgage rates
Last year, sales of previously occupied U.S. homes sank to their lowest level in nearly 30 years. They’ve remained sluggish so far this year, as many prospective homebuyers have been discouraged by elevated mortgage rates and home prices that have continued to climb, albeit more slowly.
Mortgage Rates on the Rise Again
By the numbers:
For those who say they’d be open to buying a home this year, 66% say they’d need a mortgage rate lower than 5%, Bankrate found. The average rate on a 30-year U.S. mortgage edged up from 6.67% to 6.72% last week, far above that 5% threshold, though lower than the 6.89% rate average a year ago. Only 8% of those surveyed said they’d be comfortable buying a home with a mortgage rate higher than 5%.
Why you should care:
High mortgage rates can add hundreds of dollars a month in costs for borrowers and reduce their purchasing power. That’s helped keep the U.S. housing market in a sales slump that dates back to 2022, when mortgage rates began to climb from the rock-bottom lows they reached during the pandemic.
Conclusion
The 2025 U.S. real estate market is expected to be more active, with additional inventory giving buyers more room to negotiate. However, homebuyers should be prepared for turbulence due to fluctuating mortgage rates. The study by Cotality found that many homeowners are falling behind on their mortgage payments, with southern states seeing significant increases in mortgage delinquencies. The rising costs of homeownership, including property taxes and insurance, are reducing affordability for new buyers and squeezing existing homeowners’ budgets.
Frequently Asked Questions
Q: What is the current state of the U.S. real estate market?
A: The 2025 U.S. real estate market is expected to be more active, with additional inventory giving buyers more room to negotiate. However, homebuyers should be prepared for turbulence due to fluctuating mortgage rates.
Q: Why are homeowners falling behind on their mortgage payments?
A: The study by Cotality found that many homeowners are falling behind on their mortgage payments due to rising costs of homeownership, including property taxes and insurance.
Q: Which states are seeing significant increases in mortgage delinquencies?
A: The data found that Florida, South Carolina, and Georgia had the highest change in the year-over-year overall serious delinquency rate.
Q: How are mortgage rates affecting the housing market?
A: High mortgage rates are adding hundreds of dollars a month in costs for borrowers and reducing their purchasing power, keeping the U.S. housing market in a sales slump.
Q: What can homeowners do to avoid falling behind on their mortgage payments?
A: Homeowners can consider budgeting for rising costs, exploring options for refinancing or modifying their mortgage, and seeking assistance from financial advisors or housing counselors.
