Is a real estate correction on the horizon? Experts weigh in on home price trends for 2025.

As we step into the second quarter of 2025, many prospective homebuyers and real estate investors are asking the same question: Are home prices going down in 2025? With mortgage rates fluctuating, economic uncertainty lingering, and housing inventory slowly increasing, the U.S. housing market is showing signs of a shift.

Slowing Growth Signals a Cooling Market

After two years of record-breaking appreciation, the housing market is experiencing a cooldown. According to recent data from the National Association of Realtors (NAR), the national median existing-home price rose by just 1.7% year-over-year in Q1 2025—a significant drop compared to the double-digit growth seen in 2021 and 2022.

The deceleration in home prices can be attributed to higher mortgage rates and affordability concerns. As of April 2025, average 30-year fixed mortgage rates hover around 6.5%, up from the historic lows of the pandemic era. This increase has reduced purchasing power for many buyers, resulting in softer demand.

Regional Variations: Some Markets Are Declining

While national prices remain relatively stable, some metro areas are already seeing price declines. Cities like Austin, Phoenix, and Boise—where prices soared during the pandemic—have experienced drops of 3% to 7% since mid-2024. These corrections reflect the natural rebalancing of markets that overheated due to remote work trends and investor speculation.

In contrast, more stable markets such as the Midwest and Southeast are seeing modest gains, fueled by strong job growth and affordable housing stock.

Inventory Levels Are Rising

One of the key drivers of the 2025 housing outlook is the rise in housing inventory. Listings are up 12% compared to last year, offering more options for buyers and reducing bidding wars. Homebuilders have also increased new construction starts, particularly in suburban areas, to meet pent-up demand.

This increase in supply is helping to level the playing field between buyers and sellers and may contribute to more balanced price trends moving forward.

What Experts Predict for the Rest of 2025

So, are home prices going down in 2025? Most housing analysts agree that while a full-scale crash is unlikely, prices will continue to flatten or dip slightly in overheated markets. According to Zillow’s latest forecast, home prices nationally are expected to remain flat or decrease by 0.5% to 2% by year-end.

Lawrence Yun, Chief Economist at NAR, states: “We’re not heading for a crash, but rather a healthy correction. Prices will soften in some areas, but overall stability is expected.”

Final Thoughts: Should You Buy or Wait?

If you’re in the market to buy a home in 2025, timing and location will be critical. With more inventory and less competition, buyers may find better deals—but should remain cautious of local market dynamics.

For sellers, realistic pricing and strong presentation will be key as the market shifts toward neutrality.

Bottom Line: While home prices are unlikely to plummet, a gradual decline or leveling off in many regions appears likely in 2025—making this a more balanced year for both buyers and sellers.

Published: 3rd May 2025

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