Housing Market Shows Positive Sign For Summer 2025 Buyers

Newsweek

30-04-2025

Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources.
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While home prices are still rising across the U.S., the pace of their growth has slowed down significantly compared to the previous couple of years, suggesting that the U.S. housing market is finally turning in favor of buyers.
In March, according to Redfin data, home prices inched up by only 0.2 percent month-over-month—the slowest pace since December 2022. Recent data by S&P Dow Jones for the first two months of the year confirmed this trend, showing a slowdown in home price growth.
Why It Matters
The cost of housing in the U.S. had skyrocketed since the start of the COVID-19 pandemic when relatively low mortgage rates led to an explosion in demand at a time when the country was struggling with a historic shortage of inventory.
However, climbing home prices and the sudden rise of mortgage rates in 2022, which followed the Federal Reserve's aggressive rate-hiking campaign to combat inflation, have since squeezed many aspiring buyers to the sidelines of the market. While inventory is now growing, sales are dwindling as many can't afford to buy a home or decide to wait for a better time, with less uncertainty around the future of the U.S. economy.
While buyers are still feeling the squeeze of higher housing costs, the addition of new inventory to the market is giving them more negotiating power, and sellers are increasingly being forced to slash their initial asking price to get their properties under contract.
What To Know
Home prices in the U.S. rose 3.9 percent in February compared to a year earlier, according to the latest S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, released on Tuesday. It was down from the annual gain of 4.1 percent in January.
"The 10- and 20-city indices also posted gains of 5.2 percent and 4.5 percent, respectively, slowing from 5.4 percent and 4.7 percent the previous month," Realtor.com Senior Economic Research Analyst Hannah Jones said in a statement shared with Newsweek.
An aerial view of houses undergoing construction in a neighborhood on April 17, 2025, in Austin, Texas.
An aerial view of houses undergoing construction in a neighborhood on April 17, 2025, in Austin, Texas.This month's S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index release covers home sales in December, January and February, a period in which buyers enjoyed growing inventory and easing mortgage rates.
"After peaking at 7.04 percent in January, mortgage rates eased to 6.76 percent by the end of February," Jones said. "This period of rate relief was not quite enough to spur many sidelined buyers into action. Sale prices continued to climb, however, as higher-priced homes sold to less rate-sensitive buyers."
The dynamics at work in the U.S. housing market vary significantly by region.
"The affordable Midwest and the less affordable Northeast housing markets continue to thrive as the well-supplied South and West regions show signs of cooling," Jones explained.
"New York City led with a 7.7 percent annual gain in February, the biggest among the 20 cities, followed by Chicago (+7.0 percent) and Cleveland (+6.6 percent). Tampa saw prices fall in February with a 1.5 percent decline, the lowest return of the cities," she explained.
Redfin data for March confirm that home prices are now growing at a much slower rate than before. Home prices last month rose by 4.6 percent year-over-year, down from 5.1 percent the month before. It was the 11th consecutive month that annual growth had slowed.
While sales were also down year-over-year by 2.9 percent, for a total of 401,894 homes sold in March, 19.2 percent were sold with price drops, up 4.5 percent compared to a year earlier. That suggests that buyers are slowly gaining the upper hand over sellers.
What People Are Saying
Nicholas Godec, Head of Fixed Income Tradables & Commodities at S&P Dow Jones Indices, said in a statement: "Even with mortgage rates remaining in the mid-6 percent range and affordability challenges lingering, home prices have shown notable resilience. Buyer demand has certainly cooled compared to the frenzied pace of prior years, but limited housing supply continues to underpin prices in most markets."
Jones said in a statement shared with Newsweek: "The spring selling season is here, and inventory is well above year-ago levels, offering buyers plenty of options in many areas."
She added: "However, high housing costs and widespread economic uncertainty have curbed buyer enthusiasm. Recent data shows that concerns about job security have increased, which could make both buyers and sellers more hesitant to enter the housing market until the outlook for the economy and job market becomes clearer."
What Happens Next
As the spring selling season, the busiest time of the year for the housing market, gives way to summer, aspiring homebuyers in the U.S. can expect to have more options to choose from and greater negotiating power with sellers.
However, uncertainty over the direction taken by the U.S. economy, which risks sliding into a recession should the impact of the Trump administration's tariffs be particularly disastrous, is making buyers more cautious about buying real estate now.
A recent survey by Redfin found that 24 percent of Americans are scrapping plans to make a major purchase, like buying a home, due to concerns over the impact of tariffs.