US Housing Market Shifts Amidst Cooling Prices, Rising Inventory, and Changing Buyer Power

The US housing industry over the past 48 hours continues to reflect a period of pronounced transition marked by cooling home prices, rising inventory, and shifting bargaining power. National home price growth for 2025 has slowed to just 2.4 percent year-over-year, a notable deceleration after posting 7 percent growth during the same period last year. The national median home price sits at $389,000 for August, and this year’s spring buying season ended softer than expected, opening doors for more buyers as price appreciation trails inflation. Affordability, however, remains a hurdle, with buyers needing about $200,000 more than a decade ago to purchase a median-priced home.

Inventory constraints are easing. Active home listings have climbed for twenty-one straight months, increasing by nearly 25 percent year-over-year. This brought the market to a rare five-month supply of homes nationally, the first time in nine years such equilibrium exists, meaning buyers and sellers now have relatively equal negotiating leverage. Seven major cities—where rapid home price growth once prevailed—have officially shifted to buyer’s markets, empowering house hunters with more choices and stronger negotiating positions.

Mortgage rates have become a pivotal factor in buyer behavior. The national average 30-year fixed rate has fallen to 6.32 percent this week, its lowest point since October 2024. Rate drops are attributed to expectations of an imminent Federal Reserve rate cut and softer labor market data, and are increasing affordability and enticing more buyers back into the market. J.P. Morgan forecasts rates around 6.7 percent by year-end, which could further stimulate demand, particularly in the Midwest where inventory remains lowest and price gains are the highest.

Recent months have also seen increased investor activity, accounting for approximately one-third of all home purchases—a trend likely to continue as some owner-occupant deals fall through amid uncertain expectations and tighter budgets. Builders in oversupplied regions like Texas and Florida are lowering prices and offering incentives to sustain sales, shifting buyers toward new homes and adding to the upward pressure on resale inventory.

Compared to last year, today’s US housing market is more balanced but faces ongoing challenges: affordability is slowly recovering, investor participation is robust, and regional differences remain sharp. Industry leaders are responding with price incentives, new product offers, and strategic targeting of growth markets, aiming to navigate an environment marked by elevated supply, softer price gains, and evolving consumer priorities.

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Episode Transcript

Speaker 1 (00:00):
The US housing industry over the past forty eight hours
continues to reflect a period of pronounced transition, marked by
cooling home prices, rising inventory, and shifting bargaining power. National
home price growth for twenty twenty five has slowed to
just two point four per cent year over year, a
notable deceleration after posting seven percent growth during the same

(00:21):
period last year. The national median home price sits at
three hundred eighty nine thousand dollars for August, and this
year's spring buying season ended softer than expected, opening doors
for more buyers as price appreciation trails inflation. Affordability, however,
remains a hurdle, with buyers needing about two hundred thousand

(00:42):
dollars more than a decade ago to purchase a median
priced home. Inventory constraints are easing. Active home listings have
climbed for twenty one straight months, increasing by nearly twenty
five percent year over year. This brought the market to
a rare five month supply of home homes nationally, the
first time in nine years. Such equilibrium exists, meaning buyers

(01:05):
and sellers now have relatively equal negotiating leverage. Seven major
cities where rapid home price growth, once prevailed, have officially
shifted to buyers markets, empowering house hunters with more choices
and stronger negotiating positions. Mortgage rates have become a pivotal

(01:32):
factor and buyer behavior. The national average thirty year fixed
rate has fallen to six point three two percent this week,
its lowest points since October twenty twenty four. Rate drops
are attributed to expectations of an imminent federal reserve rate
cut and softer labor market data, and are increasing affordability
and enticing more buyers back into the market. JP Morgan

(01:55):
forecasts rates around six point seven percent by year end,
which could further se stimulate demand, particularly in the Midwest,
where inventory remains lowest and price games are the highest.
Recent months have also seen increased investor activity, accounting for
approximately one third of all home purchases, a trend likely
to continue as some owner occupant deals fall through amid

(02:18):
uncertain expectations and tighter budgets. Builders in oversupplied regions like
Texas in Florida are lowering prices and offering incentives to
sustain sales, shifting buyers toward new homes and adding to
the upward pressure on resale inventory. Compared to last year,
today's US housing market is more balanced, but faces ongoing challenges.

(02:43):
Affordability is slowly recovering, investor participation is robust, and regional
differences remain sharp. Industry leaders are responding with price incentives,
new product offers, and strategic targeting of growth markets, aiming
to navigate an environment marked by elevated supply, softer price gains,

(03:03):
and evolving consumer priorities,