Interest Rates

In 2025, mortgage rates have remained relatively steady, experiencing only minor fluctuations. Although rates have occasionally increased or decreased slightly, they have not approached the much-desired levels of 3-4%, or even 5%. For several months, rates have hovered between 6% and 6.5%, with some potential for downward movement expected in the near future.

It is important to note that the Federal Reserve does not directly set mortgage rates for 30-year fixed loans. However, decisions made by the central bank do influence home loan rates. Often, the market anticipates changes in mortgage rates in advance of any official Fed decisions, a phenomenon known as the “baked in” effect. This occurred with the October Fed rate reduction. This can be disappointing for home buyers who hope for an immediate and impactful reduction in mortgage interest rates following Fed announcements. It’s difficult to predict if future rate reductions will be forthcoming, but most experts believe that mortgage interest rates below 6% are unlikely until late 2026.

Supply

The era of a “national seller’s” real estate market has ended. Home supply remains constrained in several cities, particularly in the Northeast and Midwest, where bidding wars are still common. Conversely, in states like Florida and Texas, the market has either become balanced or shifted toward favoring buyers.

Affordability Challenges

Affordability remains a significant issue in 2025, due in part to the current interest rate environment and continued increases in home prices. The median home sale price in the U.S. is now above $400,000 and remains high. While the transition to balanced or buyer’s markets has led to price reductions in some areas, other factors have compounded the affordability challenge. These include rising costs for homeowner’s insurance and property taxes.

Real Estate Agent Compensation

In August 2024, the National Association of Realtors (NAR) implemented new rules following several anti-trust lawsuits. These changes involved removing commission offers from NAR-affiliated MLS listings and requiring clear, written buyer agency agreements that outline the compensation due to the buyer’s agent. As a result, there is now greater transparency for both buyers and sellers regarding agent compensation. Despite these changes, there has not been a significant shift in compensation practices. Generally, sellers continue to cover the buyer’s agent’s compensation as part of the sale, and the amounts paid to both sellers’ and buyers’ agents have remained steady.

Rentals

Rental prices increased in 2025, although the pace of price growth has slowed in some regions due to an increased supply of rental housing and cooler market conditions. Renters now have more options and, in some areas, may benefit from concessions offered by landlords. Nevertheless, affordability continues to be a challenge for many renters.

ROAD to Housing Act 2025

The Renewing Opportunity in the American Dream (ROAD) to Housing Act was passed by the U.S. Senate in July and is currently awaiting action in the House of Representatives. The Act aims to streamline regulations, increase the housing supply, and introduce new programs for home repairs and community investment. Potential initiatives include incentives for new construction, support for modular and manufactured housing, and the development of affordable rental options. Other provisions are designed to make it easier to secure smaller mortgages, improve the home appraisal process, and help families save for down payments.

Mobility Inertia

Recent data from the U.S. Census shows that market factors have led to a decline in residential mobility, with fewer Americans changing addresses (for any reason). Estimates for 2025 are consistent with 2024 figures and represent about half the mobility rate seen in the 1960s. Although mobility rates vary across states, overall market forces are keeping people in place. Renters tend to be more mobile than homeowners, but the overall trend suggests reduced willingness to relocate. This inertia can make employees reluctant to accept job offers that require a physical move.

Mobility Program Implications

As real estate markets shift and home sales cool, companies may find that relocating employees are selling their homes for less than their purchase price, in other words, incurring loss on sale. This benefit, which was largely unnecessary during the recent robust seller’s market, may again become needed in certain areas and price ranges. Properties acquired when multiple offers and sales exceeding list prices were the norm may now experience reduced home values.

Companies with guaranteed buyout programs may also find that more homes are entering inventory. Marketing an empty house is no longer an issue to overcome as it once was. With the advent of virtual staging, agents can help buyers imagine the home furnished and ready to move into. Nevertheless, the market now expects homes to be in move-in condition from the outset. Consequently, it may be advisable to postpone listing a property until it is fully prepared to make a strong first impression.

To facilitate swift inventory sales, companies should establish or review authorization protocols for sales, repairs and improvements, and ongoing maintenance in collaboration with Cornerstone, to ensure an efficient and seamless selling process.

Interest rates in the 6% to 7% range have emerged as the new normal, exacerbating affordability challenges that can impact the financial stability of relocating employees for years to come, and potentially leading to failed relocations or increased turnover. Company investment in comprehensive relocation support programs can improve the employee experience, enhance productivity, and strengthen retention efforts.

Cornerstone is your go-to resource to help you determine the best course of action and best approach for your Global Mobility program. Please reach out to us at consultingservices@crgglobal.com for any assistance or questions you may have. We’re happy to provide you with further information on this topic or any other trends in the mobility industry.

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