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Will 2025 Finally Be a Buyer’s Market in Housing?
By Leslie Cook MONEY RESEARCH COLLECTIVE
Here’s what has changed — and where there are still hurdles.
Is it a good time to buy a house? For some buyers, and in some markets, it might be. For others, the wait may take a while longer.
According to a recent report from Realtor.com, improving conditions — specifically, a larger number of homes for sale — make the current market the best buying opportunity for those patiently waiting on the sidelines.
Even prior to the pandemic, the U.S. faced a long-standing housing shortage, according to Harvard University’s Joint Center for Housing Studies. The pandemic exacerbated this by triggering shortages of both building supplies and labor, further constricting the pipeline of homes coming onto the market.
When policymakers took emergency measures to stabilize the economy, mortgage rates plunged. By 2021, record-low borrowing costs made financing a home more affordable. Many buyers who might have waited another year or two to buy homes took advantage of this break.
But the resulting rush of buyers competing for the limited number of available homes sent prices sky-high and housing inventory tumbling. By January 2022, there was a little over a one-month supply of homes available for sale due to the buying frenzy. A six-month supply of homes is typically considered a sign of a healthy, balanced market.
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View RatesToday’s market is steadily moving toward greater balance between supply and demand. According to the National Association of Realtors, there’s currently a roughly four-month supply of homes at the current pace of sales. Hannah Jones, senior economic research analyst at Realtor.com, says that’s good news for buyers.
“Inventory availability relative to buyer demand is in a better place [now]. Buyers have more options and face less competition,” Jones says.
Data from Zillow backs up the Realtor.com report. A recent report shows that there are 13 major metropolitan areas, including New Orleans and Miami, where the local housing markets have shifted in favor of buyers. Zillow describes more than a dozen other cities as having neutral or balanced housing markets, meaning that available inventory is sufficient to satisfy buyer demand without either buyers or sellers having an outsized advantage. While these figures are encouraging, many other parts of the country still favor sellers.
More homes on the markets, price cuts and sellers motivated to offer concessions are all signs of greater market balance. If you’re seeing these conditions in your local market, this means it might be a good time to buy if you can afford it.
Are we in a completely balanced housing market?
As many current buyers struggling to find affordable homes can verify, though, the national market hasn’t achieved a happy medium just yet. Mortgage rates remain elevated. Inventory, while improving, is still significantly below pre-pandemic levels. Data from Zillow shows that the housing supply is about 28% lower than the pre-2020 average for this time of year.
“There’s a lot of families out there that are basically stuck doubling up [living with family or non-relatives] because there’s not enough housing to go around for everyone in this country,” says Orphe Divounguy, Zillow’s senior economist.
On a national level, buyer demand still outpaces supply. According to Will Begeny, vice president of marketing at Tomo Mortgage, the current housing shortage ranges between 1.6 million and 3.2 million homes, depending on how the data is tracked.
Based on the U.S. Census and other survey data, Begeny estimates that about 2 million potential buyers come into the market each year. Meanwhile, builders add about 1.6 million homes annually — not enough to meet new demand, let alone the long-standing backlog.
Another factor contributing to low inventory in today’s market is the “lock-in effect.” A large percentage of homeowners who took out or refinanced mortgages when rates were low are hesitant to sell and exchange their favorable rates for much higher ones.
Although the overall housing market may not be balanced, that doesn’t mean there aren’t cities or neighborhoods where supply and demand are equal and buyers can find affordable options. “When you get into specific markets, you might have a closer balance of available homes, affordable homes and people who are able to move into them,” Begeny says.
There also is good news for prospective buyers still struggling to find a home. Divounguy says market conditions should continue to improve over the next few years, with lower mortgage rates and a greater supply of homes expected to help lower home prices.
“I think we’re on the right path,” he says.
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Leslie Cook is Money's lead real estate editor, covering news stories about mortgages and how rate movements affect the housing market and writing and editing stories that inform our readers about real estate trends and how they affect homebuyers and sellers. Leslie writes a weekly newsletter, Money Moves, that covers a wide range of real estate topics in addition to her weekly articles. Her work has been featured on Apple News, MSN and ConsumersAdvocate.org. Leslie has been covering the mortgage and real estate industry at Money since 2019 and has interviewed industry leaders, such as Lawrence Yun, chief economist at the National Association of Realtors, and Glenn Kelman, CEO of brokerage Redfin. She has been a guest on the This Morning with Gordon Deal radio show, interviewed by The Mortgage Note, and served as moderator for ServiceLink’s State of Homebuying webinar. While at Money, Leslie has contributed to several of Money’s rating and ranking features, including Best Places to Live, Best Places to Travel and Changemakers. She has also played a major role in researching and selecting Money’s Best Banks rankings for the past four years. Before joining Money as a staff writer, Leslie was a reporter for Caribbean Business Newspaper in San Juan, Puerto Rico, covering human resources, telecommunications and computers. She graduated cum laude from Bryn Mawr College in Pennsylvania with a bachelor’s degree in history. The research and interviewing skills learned there have contributed to Leslie’s ability to provide accurate information on her area of expertise and elicit informative responses from her interviewees.