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Top of Mind

2025 could be the last year of inventory shortage (2/24/25 Market Update)

Feb 25, 2025
Get ready for a deep dive into the U.S. housing market as experts analyze the latest trends. Home prices are showing signs of slowing growth, which could change the game for buyers and sellers alike. Inventory levels are critical, with predictions suggesting 2025 might be a turning point. The dynamics between supply and demand are shifting, driven by economic conditions and interest rates. Stay tuned for insights that could help you navigate the evolving landscape of real estate.
17:32

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Quick takeaways

  • Home prices are experiencing a limited growth of around 2% in 2025 due to ongoing inventory shortages and rising mortgage rates.
  • An increase in unsold single-family homes, particularly in states like California and Arizona, indicates a shift in market dynamics and future pricing.

Deep dives

Home Prices and Market Dynamics

Home prices in 2025 are slightly higher than the previous year, but this growth is limited to about 2%, reflecting a significant slowdown compared to the historical average of around 5% annually. A crucial factor in maintaining these elevated prices is the limited inventory of homes available on the market, which impacts the supply-demand balance. Even though buyer demand has decreased due to higher mortgage rates, the low supply means that properties don't need to be affordable for everyone, just for a select few buyers. However, as inventory is expected to normalize by next spring, there is potential for home prices to stabilize or even decline if the trends continue.

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