HousingWireHousingWire
There are three big trends in the spring 2025 housing market:
- Supply continues to build. This is measurable in both the total unsold inventory and the number of new listings each week. Because each week we have 8–15% more sellers than last year, the total inventory will continue to build unless and until demand shifts dramatically, which would require notably lower mortgage rates. Those do not seem imminent.
- The weekly pending home sales rate is above last year at this time. There are just slightly more home sales happening now than last year at this time. There are more sellers each week, and there are more sales, but the supply side is growing faster than demand. One thing greater supply allows is greater transaction volume, but the latter isn’t moving nearly as fast.
- Home price pressures continue to be lower. Supply is up, nearly to pre-pandemic levels across the country, and demand is still weak. That implies price pressures. While home prices are still just a little bit higher than last year at this time, the trend is underway, and prices could shift negative very soon. There are lots of markets around the country where home prices are already below last year at this time, but the national average has remained positive so far. It’s getting close.
We have the added wrinkle this year of a rapidly slowing economy. As the year progresses, we’ll see whether lower mortgage rates — assuming we get them — can offset consumer fears about recession, tariffs, and job security. The bad vibes on the economy have not really been a factor for the U.S. homebuyer in 15 years. Right now, employment is weakening, but it isn’t bad yet. There is lots of data signaling a slowing economy, but we entered the year with a lot of economic strength. So, it pays to keep watching the data closely to see how homebuyers react.
The takeaway here is that in the last few years, the headlines have been saying, “Home sales are down, but prices keep climbing,” but that may very soon switch to, “Home sales are finally climbing again as home prices dip.”
Let’s take a look at the data and see the specifics.
Home prices
This is a view that I don’t often share, but it’s very useful right now. This chart looks at the prices of all the pending home sales and how that median price has changed from the year prior, annual home price appreciation. There are 358,000 single-family homes in contract right now, and they are priced only 50 basis points above last year at this time.
This shows the year-over-year price change. You can see that coming out of the pandemic at the left end of the chart, home prices were rising by 10%, 12%, and 15% over the previous year. That pace slowed dramatically in 2022 and turned negative in January 2023. As demand recovered a bit in 2023, we moved into two years where home sales were down, but home prices were up. Home prices were up 4% to 6% each of the last two years.
But now we’re at the right end of the chart, and the line sure looks like it’s heading negative. Pending home sales prices are still half a percent higher than they were last year at the end of March — so still positive nationally — but the weekly moves are stepping lower as supply builds and demand doesn’t.
By the way, in the HousingWire/Altos rental data, we’ve observed that rents on single-family homes are also pushing lower and have turned negative compared to last year. Rents and home prices always tend to move together, and they’re both moving lower together right now.
Weekly pending home sales prices
In this week’s pending home sales, the median price was $395,000. That’s up a smidge from last week and remains just a hair above this point in 2024. The purple line here is climbing a little bit, as you’d expect for the spring, but it’s barely above last year’s blue line.
One thing to keep in mind about home prices, which this chart illustrates well; the data does not show a home price crash. Usually, when I talk about negative home price pressures, the comment sections are filled with people declaring a crash is underway. A crash is not underway. This is more like a multi-year ordeal than a fast crash.
In 2022, we could see very specific, very rapid moments of home prices dropping. I’ve highlighted those in the green line here from 2022. Home prices actually dropped in June and again in September 2022. That pattern is not happening now.
If you’ve paid attention to my work, you might know that I don’t see a crash coming, and that for 8 or 10 years, the housing crash people have declared a crash is upon us. I’ve been of the view that multiple years of flat or slightly down price changes is a much more likely scenario than a “crash.” It feels like we’re in that multi-year scenario right now with weak home price trends. Not a crash, but ample supply that keeps a cap on prices rising.
Price reductions
To wrap up the analysis of home prices, let’s look forward.
Thirty-five percent of the homes on the market have taken a price cut from the original list price. That’s an increase of 70 basis points for the week. Last year, fewer than 32% of the market had price cuts, and that rate was climbing at a slower pace than it is now.
Price reductions are moving pretty quickly each week, so this continues to be a bearish leading indicator for future sales prices. We’ve been talking about this for several months now.
This chart shows each year’s price reduction curve. 2025 has more homes on the market with price cuts than any March in the last decade. Price reductions are a very fast signal of demand shifts. You can see that in last year’s blue line after September. September 2024 was the moment when mortgage rates hit their lowest point of the last year. That spurred demand enough that price cuts plateaued and started easing down. You can see that the blue line from 2024 behaved very differently from the fall of 2022 (the green line).
Therefore, the takeaway from the recent price reduction data is that we’ve seen home prices generally under negative pressure this year. That’s true of the active listings and the pending home sales. It’s true of the leading indicators of future home sales prices. Price cuts are generally accelerating, implying that home sales prices in the next few months will remain under pressure.
Pending home sales
Price pressures are increasing. But on the transactions — the total number of home sales happening — it sure looks like home sales are finally ticking above last year’s pace. We could very soon be seeing headlines: “Home sales are up, but prices are down.”
Can the pace hold up? In 2024, home sales slowed in the second quarter due to spiking mortgage rates. If we’re lucky, this year we get the opposite dynamic in April, May, and June, maybe falling mortgage rates and slightly improving sales.
There were just over 69,000 newly pending home sales this week for single-family homes around the U.S. That’s up about 70 basis points from last week and just about unchanged from the same week a year ago. Home sales generally climb each week during the spring. That should continue through May. If we’re lucky, we’ll hit 80,000 sales in a week this spring.
Last year, Easter was early, and you can see the dip in the sales numbers in the blue line. This year, Easter is later in April, so we’ll have a growth week when the weekly pending home sales numbers come in next. For most of the first quarter, home sales were running below last year at this time. As of right now, it looks like the second quarter — April, May, and June — are set up to show sales growth over 2024. A little bit of growth.
There are two competing forces with the home sales numbers in the coming quarter, though. On the positive side, as I’ve mentioned, sales are ticking up slightly. That’s, I think, because mortgage rates are off their peak and buyers are tiptoeing back into the market. Rates are not really coming down, but they’re stable, about 6.6%, and it seems like stable mortgage rates are more likely to help sales volume than jump the other direction and hurt us in Q2.
On the other hand, the economy is definitely slowing. Massive new taxes are being proposed, maybe they go into effect this week. These are negative macro forces that the housing market hasn’t had in 15 years. So even if rates dip, will homebuyers respond if they’re worried about their income? We’re not in a recession, and I don’t have an answer. We don’t yet know how the taxes will be implemented, by how much, or for how long. But what I’m watching for is whether the nascent momentum of sales growth over last year keeps going into the second quarter. As of now, and for the next couple of weeks, it looks like it. But there’s a ton of chaos in federal policy, so that is a big risk looming to derail the housing market.
Inventory
There are now 676,000 single-family homes unsold on the market. That’s up 1.1% for the week and is now 30.6% greater than a year ago. Supply is building.
In this chart, each line is a year. I’ve highlighted this year in purple, last year in blue, and the 2019 curve in green. 2019 started a bit slow. The economy was slowing from the last trade war, and the Fed had just started cutting interest rates to try to keep the economy out of recession. By the end of 2019, interest rates were down, so housing demand was up. Inventory started falling pretty quickly in the second half of 2019. That green line at the right end of the chart was sloping down each week. We ended 2019 with 782,000 single-family homes unsold on the market. That’s right about what we’ll end 2025 with also.
Assuming current trends continue, we’ll see this year’s curve finish at the 2019 levels. If mortgage rates fall enough to stimulate demand—say, for example, rates fall to 6% or even duck below that, then I expect that to spur demand faster than supply, so we’d finish the year closer to 2024 inventory than 2019. And while there’s no sign yet of mortgage rates getting low enough to really move the needle on demand, there are still nine months left this year and massive uncertainty about the economy. So, who knows? Rates could get there.
The takeaway from the inventory chart is that lower rates create less inventory; higher rates lead to more inventory. And the 2025 path is one of higher inventory. There has not been any shift to slowing down the supply growth. More homes for sale for the rest of the year.
New listings
The supply side of the housing market equation includes all those homes on the market — the active inventory — and it also includes the new listings each week. It’s like, “How full is the reservoir and how much is it raining?”
For three years, the reservoir has slowly been filling, but it hasn’t been raining very hard. We’re out of the drought, but the dam isn’t bursting.
Well, it’s raining a bit harder now. Not a downpour, but it’s raining.
Nearly every week for five years in a row — so maybe 200 of these weekly columns and videos — I’ve said that until we see the new listings volume climb, we’re not going to shift out of the tight supply reality. Well, new listings are climbing. It sure seems like we are transitioning out of the housing supply assumptions of the last five years into a new set of assumptions going forward.
There were 68,000 new unsold listings this week around the country. That was a little dip for the week by a couple of percent. But it’s still 13% more new unsold listings than the same week in 2024. There were fewer immediate sales, too. We counted 14,000 new listings that are already in contract. So overall, there were 6% more sellers coming to market this year than at the end of March last year. Five, 10, 15% more sellers each week now. It’s raining 5–10% harder each week now. The current rate of new listings is 24% higher than in March of 2023.
In this chart, we have the weekly new listings rate. The purple line is this year. It’s closer to the gray lines from past years at the top of the chart than it is to the lines at the bottom of the chart from the last five years. The rate isn’t skyrocketing, but it continues to add supply each week. We don’t have 100,000 new listings each week because the vast majority of Americans are very secure in their homes with their cheap mortgages.
This isn’t 2008, when the opposite was true. At that time, there was a rush of sellers to get out of very bad mortgages with no equity and relatively high rates that were adjusting higher. Now, we are locked into ultra-low rates. So do not interpret this shift as a crash. But recognize that, as I’ve mentioned here, supply is growing and will continue to grow. Home price pressures are on and will continue to be on until something changes with buyer demand.
That’s why the big trends now are increasing supply — that enables slightly more sales, but not a lot — and therefore continued downward pressure on prices. We could, in the next few months, be saying, “Home sales are up, as home prices are down.” Stay tuned for that.
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