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2025 could be the last year of inventory shortage

Housing Wire

Home prices in 2025 are a couple percentage points above where they were last year at this time. One reason that home prices have stayed elevated is that inventory nationally is still restricted. But if current trends continue, the inventory shortage will be effectively gone by next spring. is more like 5% per year.

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What rising inventory means for the 2025 housing market

Housing Wire

As the year draws to a close, available unsold inventory of homes on the market is nearly 27% greater than a year ago. Ten states have more inventory unsold than in 2019, which was the last sort of normal year before the pandemic. Inventory is still very tight in places like Chicago and New England, but it is rising in these markets.

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The two big housing market trends to watch in 2025

Housing Wire

However, there are two big trends that stand out as we launch into 2025 affordability and sellers in the market. In 2025, housing affordability in the U.S. That growth is in jeopardy if we stay at the high end of the mortgage rate range into the first quarter 2025. The elephant in the room is affordability.

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Will home prices fall in 2025 with more inventory?

Housing Wire

As mortgage rates rose, homebuyer demand slowed and inventory grew. In 2025, mortgage rates have stayed stubbornly high for yet another spring buying season. Our 2025 housing market predictions are based on the assumption that lower mortgage rates will spur demand and boost the number of homes sales transactions.

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Better mortgage spreads boost housing demand in 2025

Housing Wire

One of the lesser known storylines in housing economics is that the improvement in mortgage spreads since 2023 has contributed to a noticeable trend in purchase application data for 2025, which is now showing 15 consecutive weeks of positive year-over-year growth. That hasnt happened so far this year.

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With more inventory, where are home prices headed?

Housing Wire

While that forecast was lower than most others, it seemed achievable due to higher mortgage rates and increased inventory. Inventory is higher this year than in 2024, and mortgage rates haven’t dropped to 6%, which caused my forecast to be off last year. Unsold inventory sits at a 4.4-month higher than I predicted.

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How to think about home prices for the rest of 2025

Housing Wire

Because inventory was so restricted after the pandemic, prices pushed higher even as demand weakened. That story may finally be inverting as unsold inventory of homes is now great enough that home prices are below last year’s levels in many parts of the country. That’s 32% more than this time last year. Arizona : -1.6% Georgia : -1.3%

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