US Housing Market Shifts: Declining Prices, Rising Inventory, and Changing Buyer Behavior Podcast By cover art

US Housing Market Shifts: Declining Prices, Rising Inventory, and Changing Buyer Behavior

US Housing Market Shifts: Declining Prices, Rising Inventory, and Changing Buyer Behavior

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 The US housing market over the past 48 hours continues to show signs of transition, with both buyers and sellers adjusting to shifting economic conditions. Recent industry data indicates home values are projected to decline by 1.9 percent in 2025, marking a turnaround from earlier expectations of slight growth. This change is occurring alongside a 3.3 percent increase in existing home sales, with annual sales now forecasted to reach 4.2 million. The combination of higher available listings and persistent elevated mortgage rates is leading sellers to cut prices at record levels in order to secure offers, especially as the spring home-buying season peaks and then tapers toward summer.

Single-family existing homes for sale have risen roughly 20 percent year-over-year, but inventory nationwide remains historically low, about 20 to 30 percent below previous troughs. However, new homes for sale have surged, now at their highest levels since 2007, with speculative builds also reaching the highest numbers since 2008. Despite this expansion, the overall housing supply is still tight, and affordability remains a chief concern for many buyers.

Recent mortgage rate volatility continues to shape demand. While rates have edged lower from last year’s highs, they remain unpredictable, with current forecasts placing them around 6.5 percent by year-end. This has had a dual effect: some would-be buyers have postponed purchases, waiting for sharper rate declines or further price corrections, while others have turned to single-family rentals. Demand for rentals is projected to rise, with single-family rents expected to increase 3.1 percent and multifamily rents 2.1 percent this year, both slower than previous annual rates. Apartment construction has slowed, narrowing the gap between these rental markets.

Industry leaders are responding with aggressive price reductions, flexible financing offers, and incentives for first-time buyers. Homebuilders are increasing inventory but remain cautious to avoid oversupply. Compared to earlier in the year, price growth has noticeably slowed, with annual gains dropping to 2.5 percent in March. These adjustments reflect an industry pivoting to more normalized transaction volumes and pricing trends, while continuing to grapple with affordability and supply challenges.
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