Is It a Buyers' or Sellers' Market?
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Homebuyers across the U.S. may find a welcome change this year, as the housing market begins to offer more favorable conditions after years of challenging affordability. However, while the landscape in some regions is changing to favor buyers, some areas continue to present difficulties.
Why It Matters
The current shift in the housing market affects home prices, inventory levels and mortgage rates, impacting both buyers and sellers. According to Realtor.com, existing home sales are projected to increase this year. While active inventory levels are expected to rise by 11.7 percent, increasing options for buyers, many markets still face supply constraints that favor sellers. These changes highlight the complex and regionally varied nature of today's housing market, with implications for both affordability and economic stability.
Are Home Prices Dropping in the U.S.?
While home prices are not dropping, they are rising at a more moderate pace compared to the past few years. According to Redfin, the median sale price of homes was $418,284 in January, a 4 percent increase from the previous year.
Realtor.com projects that the median existing home price will increase by 1.5 percent in 2025, while Zillow's Home Value and Home Sales Forecast for February projects home values to rise by approximately 0.9 percent, down from a previously anticipated 2.9 percent increase. This stabilization contrasts with the double-digit price surges seen in previous years and suggests that while affordability remains a challenge, the market is moving toward more sustainable growth.
Should You Buy a House Now or Wait for a Recession?
Whether you should buy now or wait depends on your financial situation and market conditions. Mortgage rates, a key factor in affordability, are expected to average 6.8 percent in 2025 and 6.5 percent in 2026, according to Fannie Mae.
While some economists warn of potential economic slowdowns, there are concerns that high levels of new home inventory could signal a recession. Historically, such high inventory levels have coincided with economic downturns, raising fears of a potential recession. However, most forecasts do not predict a significant recession that would lead to drastic declines in home prices.
If you are financially prepared and find a home that meets your needs, purchasing now could be beneficial before prices and competition increase further.
Is It a Sellers' Market or Buyers' Market Right Now?
The U.S. housing market in 2025 is in transition, creating conditions that vary by region. Realtor.com's forecast highlights an increase in active listings, giving buyers more choices and reducing bidding wars in certain areas. Additionally, in states like Florida, inventory has surged 22.7 percent from the previous year, according to Redfin, giving buyers more negotiating power.
Meanwhile, markets in the Northeast and Midwest remain competitive due to persistent inventory shortages, keeping sellers in a stronger position. This mixed landscape means whether it is a buyer's or seller's market depends largely on location.
What People Are Saying
Redfin economics research lead Chen Zhao said in a previous statement: "Historically, a buyer's market has been defined as when months of supply reaches 4-6 months—but old definitions don't fit the reality of today's market. Many buyers don't feel like they are in a buyer's market, with home prices at near-record highs and mortgage rates elevated. But we are more than halfway through the decade and this is the first time we can say that buyers have as much, if not more, power than sellers."
Kara Ng, senior economist at Zillow, previously told Newsweek: "The housing market is on solid ground.... Zillow's forecast calls for home values to grow only about 1 percent this year, which should help buyers catch up financially. As long as the economy remains strong and wages continue to grow, affordability looks like it will improve.
Alex Beene, financial literacy instructor for the University of Tennessee at Martin, previously told Newsweek: "The only type of buyer that may find value in the current housing market is one who can find a good deal and is willing to tolerate higher interest rates for a period of time before they start to decline. We are seeing some new builds with more aggressive pricing in many real estate markets, as these properties started production at a time when housing was easier to move. While it's still not the best time to buy, finding a new build at a lower price and promotional interest rate is the way to go until the broader market gets more financially reasonable for buyers."
NAR chief economist Lawrence Yun said in a statement: "It is unclear if the coldest January in 25 years contributed to fewer buyers in the market, and if so, expect greater sales activity in upcoming months. However, it's evident that elevated home prices and higher mortgage rates strained affordability."
What Happens Next
Looking ahead, the housing market is expected to continue moving toward balance. With mortgage rates stabilizing and inventory increasing, buyers may find more opportunities. However, affordability challenges will persist in high-demand areas.
By Robert Thorpe - Senior Editor - Newsweek
https://www.newsweek.com/housing-market-update-buyers-sellers-current-prices-2039016
@ChuckBarberini - #ChuckBarberiniRealEstate - @ChuckBarberiniRealEstate
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