Wisconsin 2025 Home Sales and Price Appreciation Primarily Impacted by Inventories and Mortgage Rates

By Tom Larson, President and CEO of the Wisconsin REALTORS® Association

With insights from David Clark, Marquette University Professor Emeritus of Economics

Existing home sales grew for a second straight year, albeit at a slower pace than 2024.  If the pace of sales established in the first 10 months of 2025 continues through the end of the year, home sales will approach 69,400 for the year, which represents a 2.4% increase from 2024.  Note that this is about half the 5% rate of growth seen in 2024.  In addition, the statewide median price is on pace to close 2025 at just under $327,400 which is an increase of approximately 5.6% over the 2024 average of $310,000. It should be noted that this is the lowest annual rate of housing price appreciation recorded since 2017.  These trends are influenced by numerous factors, most prominently inventories and affordability.

There is ongoing progress on the inventory front. Total inventories have finally begun to improve, which has led to modest growth in sales and some easing of the appreciation of sale prices. To provide some perspective, WRA began tracking annualized changes in total inventories in January 2016, and they consistently fell until September 2023 when the trend reversed. While the overall inventory growth rate for all of 2023 was still negative, we have seen significant improvement since that time.  Specifically, the 2024 average growth of total inventories was 14.8% and it averaged growth of 9.7% for the first 10 months of 2025. Although the state housing market is still classified as a seller’s market since it has less than the six-months of supply that signifies a balanced market, we are making progress here as well. There was an average of 3.9 months of supply for the first 10 months of 2025 and this compares to an average of 3.5 months of supply in 2024, 3 months in 2023, and just 2.5 months in 2022.

Affordability challenges have generally softened demand, especially for first-time buyers and mortgage rates play a significant role in determining housing affordability. The Wisconsin Housing Affordability Index shows the percent of the median priced home that a potential buyer with median family income qualifies to purchase assuming a 20% downpayment, and the remaining balance financed with a 30-year fixed mortgage at current rates. In 2020 and 2021, 30-year mortgage rates were under 4% and as a consequence, the average annual housing affordability index was more than 200% indicating a high level of affordability.  However, since 2023, average monthly mortgage rates have ranged between 6.2% and 7.6% which combined with relatively strong housing price appreciation has dropped the affordability index to the range of 128% to 134%. The good news in 2025 is that mortgage rates have been trending downward throughout the year and home price appreciation has moderated.

We believe 2026 will see additional growth in existing home sales.  Ongoing demographic shifts will continue to play an important role. The oldest baby-boomers turn 80 in 2026, and their average age will be just over 70 years. The aging of this generation will increase the pressure on older boomers to transition out of single-family homes. We are also hopeful that mortgage rates will continue to fall into the upper 5% range.  Lower mortgage rates will also improve inventories as existing homeowners with mortgages in the 3%-4% range are more willing to take on a new mortgage if current rates continue to fall.  Lower rates will also improve affordability which will make it easier for first-time buyers to finally buy their first home,

There are many ways that policymakers can help improve the housing market. The Trump administration needs to continue its efforts to keep inflation in check while maintaining a strong labor market. Lowering tariffs, promoting domestic energy projection and reducing the regulatory burden will improve productivity for producers and help grow the economy while also lowering inflationary expectations to bring down mortgage rates. State and local policymakers can improve the state economy by pursuing pro-business initiatives that allow Wisconsin firms to grow and thereby create jobs that attract and retain a strong statewide workforce. A key component of that strategy is maintaining a healthy housing market by streamlining the regulatory process to make it profitable for developers and builders to serve buyers at various price points including entry-level homebuyers. It also means keeping the property tax burden low which also promotes affordability.

Larson is president and CEO of the Wisconsin REALTORS® Association (WRA).

Founded in 1909, WRA is one of the largest trade associations in Wisconsin. It represents and provides services to more than 15,000 members statewide.