As we move deeper into the spring housing season, many are asking whether home prices will soften in 2025. It’s a valid question, particularly as we’re seeing more homeowners listing their properties after several years of limited inventory.
Let me walk you through what I’ve been tracking, and why I believe these changes may signal renewed strength and opportunity in the market—not weakness.
Inventory Is On the Rise
Over the past few weeks, there’s been a clear increase in new listings. Just last week, around 68,000 single-family homes came onto the market. That’s a 7% increase from the week prior. Compared to this time last year, we’re looking at 14% more newly listed homes still available, making this the highest level of unsold new listings we’ve seen in mid-March since 2020.
This growth tells me seller behavior is shifting. Many homeowners who locked in ultra-low mortgage rates over the past few years have held off from selling, but now, with rates staying elevated, we’re starting to see some of that pent-up inventory being released. Others may have delayed moving during the uncertainty of the past few years and are now ready to make a change, regardless of where mortgage rates stand.
The key point here is that inventory isn’t growing because of panic—it’s increasing because the market is balancing out after years of artificial constraint.
Economic Shifts Are Playing a Role
Of course, it’s important to take the broader economic backdrop into account. Recent policy shifts—like new trade tariffs, adjustments in immigration policy, and reduced government spending—are having an impact on economic growth. We’re also beginning to see unemployment tick up, something that hasn’t been a factor in the housing conversation for quite some time.
But even with those macro factors in play, the fundamentals remain strong. Inflation continues to cool, consumer spending is healthy, and wage growth remains solid. What’s more, the increase in inventory is not a sign of distress. It’s a reflection of a more normalized, sustainable market where buyers finally have options, and sellers are adjusting to realistic market conditions.
Available Inventory Growing Faster Than Expected
Right now, total unsold inventory is sitting at about 656,000 homes, a 2% increase over the previous week. That translates to roughly 13,000 more homes added to the market in just one week. This time of year, a steady inventory build is expected, but the pace is slightly quicker than anticipated.
What stands out to me is that we now have 29% more inventory available than we did at this time in 2024. My expectation had been for that number to settle closer to 18%-19% above last year’s levels by year-end. However, if this current trend continues, we may need to revise that outlook upward.
But here’s the crucial takeaway: inventory can grow, and prices can still hold firm. We’re not seeing any indication that this added supply is outpacing demand in a way that would trigger price corrections.
Pending Sales See Positive Movement
Another encouraging sign is on the demand side. Last week, 66,000 homes went under contract, marking a 4% increase week-over-week. Pending sales volumes are tracking closely with what we saw this time last year, when mortgage rates were peaking and sidelining buyers.
Interestingly, mortgage rates today are around 50 basis points lower than they were at the start of the year. This slight improvement is helping drive momentum, and I believe there’s plenty of room for demand to continue strengthening as rates stabilize.
What’s clear is that buyers have re-entered the market. They’re taking their time, yes, but they’re also being strategic—waiting for the right deal, knowing there’s more inventory to choose from. That puts them in a stronger negotiating position, but also speaks to the underlying confidence buyers have in the long-term value of real estate.
Home Prices Are Holding Steady
Now, let’s talk about pricing. Despite higher inventory, prices remain remarkably stable. The median price for pending sales last week was just under $390,000, virtually unchanged both from the prior week and from the same time last year.
The median asking price for active listings rose slightly, up nearly 1% to $439,000. Year-over-year, that’s also about a 1% increase.
What this tells me is that even with more options available, home values are holding firm. There’s no rush from sellers to lower prices, and no indication of distressed selling. Instead, we’re seeing a stable, healthy market where prices reflect steady demand.
Price Reductions Reflect Market Normalization
One trend worth noting is the increase in price reductions. Currently, about 34% of active listings have had at least one price cut. That’s a significant figure for March.
However, I view this less as a warning sign and more as another indicator of market normalization. Over the past few years, many sellers became accustomed to bidding wars and homes selling within days. Today’s environment is different. Buyers are more measured, and sellers are adjusting expectations accordingly. It’s a natural part of returning to a balanced market, not a signal of market weakness.
Why I Remain Confident in 2025
Taking all this into account—the increase in inventory, the stabilization of prices, the uptick in pending sales, and the broader economic landscape—I remain confident in the strength of the housing market in 2025.
What we’re witnessing is not a downturn, but a market regaining balance. For buyers, there’s more choice and more negotiating power. For sellers, there’s still solid demand and price stability. And for both, the conditions suggest a healthy, sustainable market going forward.
If rates continue easing, demand will likely strengthen even further. But even if rates remain elevated, the data shows that today’s housing market is resilient, adaptable, and poised for continued stability. The window of opportunity is wide open right now, and those who understand these dynamics are in an excellent position to benefit.
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