Vawn Himmelsbach

Thu, Jun 5, 2025, 10:00 AM6 min read

Jamie, 28, recently married her long-time boyfriend, Ben. They’ve always been careful with their money as a couple, sticking to a monthly budget and saving 15% of their salaries. They even opted for a small, simple wedding rather than racking up debt.

Jamie and Ben rented a small one-bedroom apartment when they moved in together five years ago. It made sense at the time. They were just starting out in their careers and liked to have some extra money for dining out and entertainment.

Now they’re thinking of starting a family and are not so keen on renting.

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Jamie has always wanted to own her own home and she doesn’t want to raise kids in a rental apartment.

But since current home prices and mortgage rates make it a “lousy” market for people looking for starter homes, Jamie’s wondering if it makes more sense to invest in the S&P 500 and save as much as possible while continuing to rent.

U.S. home prices were up 1.3% in April compared to the same time last year, according to Redfin, selling for a median price of $438,108.

Mortgage rates remain relatively high, still below the 7% threshold, but averaging 6.83% in May, according to Freddie Mac.

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These factors may help explain why demand — often understood through existing home sales — “remains exceptionally low,” according to J.P. Morgan’s home price outlook for 2025,

“The U.S. housing market is likely to remain largely frozen through 2025,” J.P. Morgan Research reports. “Some growth is still expected, but at a very subdued pace of 3% or less.”

That leaves many potential homebuyers wondering when — or if — there’s going to be a good time to buy a new home.

Over the next two years, home prices may drop as housing supply grows, and mortgage rates could fall with Treasury yields, according to Morgan Stanley strategists.

But as the investment bank notes, that doesn’t necessarily mean “a return to the pre-pandemic era of more affordable mortgages and home prices.”