US Housing Market Trends: Buyer Leverage Rises, Price Growth Slows in 2025

The US housing industry is in a period of cautious change, showing early signs of becoming more favorable to buyers as of September 2025. Mortgage rates, which peaked at 8 percent in late 2023, have recently dropped to about 6.56 percent. While this is still higher than pre-pandemic levels, the decrease offers some modest relief to buyers who have been sidelined by affordability challenges in recent years. Median home prices have flattened, increasing just half a percent year-over-year to around 439,450 dollars, with notable regional variation. Prices continue to rise in the Northeast and Midwest but have declined in several Sun Belt cities such as Austin and Houston, reflecting shifting demand and local economies.

Inventory remains a core problem, with a persistent shortage of roughly 4.9 million housing units nationally, although some markets are seeing increased listings. Homes priced under 499,000 dollars are attracting stronger demand, prompting builders to cut prices on new builds to keep sales moving. Despite the slight increase in available inventory, affordability still stands about 70 percent above pre-pandemic norms, sharply limiting potential buyers’ purchasing power. Only about 28 percent of US homes are now considered affordable for the median household. Nevertheless, there is some optimism that expanded credit availability through VantageScore 4.0, adopted in July, could enable up to 5 million more Americans with non-traditional credit histories to qualify for mortgages.

Industry leaders are responding by shifting investment toward high-growth segments such as data center and industrial properties, with real estate investment trusts in these sectors posting 10.9 percent growth in core FFO, while traditional homebuilder equities remain more volatile. Regulatory news includes expectations of a Federal Reserve rate cut as soon as this month, though rates are projected to remain well above the historic lows of the pandemic. Looking ahead, Zillow forecasts a slight national price decrease of 0.9 percent by year-end, but experts warn real estate conditions will stay intensely local.

Compared to last year, the biggest shifts are in buyer leverage and price growth moderation, signaling a slow move away from the seller’s market frenzy, but major affordability and supply challenges remain.

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Episode Transcript

Speaker 1 (00:00):
The US housing industry is in a period of cautious change,
showing early signs of becoming more favorable to buyers. As
of September twenty twenty five, mortgage rates, which peaked at
eight per cent in late twenty twenty three, have recently
dropped to about six point five six per cent. While

(00:20):
this is still higher than pre pandemic levels, the decrease
offers some modest relief to buyers who have been sidelined
by affordability challenges in recent years. Median home prices had flattened,
increasing just half a percent year over year to around
four hundred thirty nine thousand, four hundred fifty dollars, with
notable regional variation. Prices continue to rise in the Northeast

(00:43):
and Midwest, but have declined in several Sun Belt cities
such as Austin and Houston, reflecting shifting demand in local economies.
Inventory remains a core problem, with a persistent shortage of
roughly four point nine million housing units nationally. Although some
markets are seeing increased listings, homes priced under four hundred

(01:04):
ninety nine thousand dollars are attracting stronger demand, prompting builders
to cut prices on new builds to keep sales moving.
Despite the slight increase in available inventory, affordability still stands
about seventy percent above pre pandemic norms, sharply limiting potential
buyers purchasing power. Only about twenty eight percent of US

(01:25):
homes are now considered affordable for the median household. Nevertheless,
there is some optimism that expanded credit availability through Vantage
Score four point zero, adopted in July, could enable up
to five million more Americans with non traditional credit histories
to qualify for mortgages. Industry leaders are responding by shifting
investment toward high growth segments such as data center and

(01:48):
industrial properties, with real estate Investment trusts in these sectors
posting ten point nine percent growth in core FFO, while
traditional home builder equities remain more volatile. Regulatory news includes
expectations of a federal reserve rate cut as soon as
this month, though rates are projected to remain well above
the historic lows of the pandemic. Looking ahead, Zillo forecasts

(02:10):
a slight national price decrease of zero point nine percent
by year end, but experts warn real estate conditions will
stay intensely local Compared to last year. The biggest shifts
are in buyer leverage and price growth moderation signaling a
slow move away from the seller's market frenzy, but major
affordability and supply challenges remain