As we settle into 2025, the economy and real estate market continue to evolve, shaped by shifting consumer behaviors, interest rates, demographic trends, and a new administration. At our annual Economic Forecast Breakfast and Affiliate Expo on Feb. 7, we heard from industry experts Charles Gascon and Dr. Jessica Lautz about what they expect in the real estate market and the broader economy in 2025.

Here's a breakdown of the major takeaways and what they mean for the year ahead.

Charles Gascon, economist and research officer from the Federal Reserve Bank of St. Louis, provided a robust outlook on the economy's state and growth projections, specifically focusing on the labor market and inflation trends. From his presentation, Gascon noted that the St. Louis economy is holding steady, though growth is starting to slow after a period of strong expansion. Since the region's industries closely mirror the national economy, its business cycle follows a similar pattern. One big challenge he predicts is an aging population and fewer people moving in, which keeps unemployment low but also limits workforce growth and business expansion.

While the data suggests the economy is in decent shape, some businesses report feeling more uncertainty. Most expect little change in hiring over the next year—wages are gradually stabilizing, and layoffs are rare, though fewer people are quitting their jobs. Inflation remains manageable for now, but there's a chance it could pick up again in the near future. Overall, the outlook is improving, but short-term risks still lean toward a slowdown.

Dr. Jessica Lautz, deputy chief economist and VP of research at the National Association of REALTORS®, shared insights on the latest real estate trends, demographic shifts, and the ongoing challenges in the housing market.

Home sales in 2024 were the lowest number recorded since 1995 despite the U.S. population growing by 75 million people. Inventory remains tight, keeping prices high. Missouri has seen a 53% increase in home prices since 2020, with the median price in St. Louis reaching $280K in 2024.

First-time homebuyers made up just 24% of all buyers last year, putting down an average of 9% on their purchases. In contrast, repeat buyers typically put down 23% and were more likely to pay in cash. Multi-generational home purchases also reached a record high of 17%, reflecting shifts in household structures and affordability concerns.

Affordability remains a challenge as home prices continue to rise. However, the pace of price increases is expected to slow in 2025, offering some relief to buyers. Mortgage rates have cooled from their 2023 peak of 8%, but they are expected to remain in the mid-6% range. Lautz noted that those who are waiting for rates to return to 3-4% may be waiting indefinitely, making it crucial for buyers to evaluate their options now.

Dr. Lautz emphasized the importance of expert guidance in navigating today's market. While conditions remain challenging, opportunities still exist for REALTORS® who take the right approach. 

Following the presentations, attendees participated in a Q&A session, gaining additional insights into the economic factors shaping the real estate landscape. If you missed the breakfast, photos are available on our Facebook. Download the presenter's presentation slides.