US Housing Market Slowdown: Inventory Rises, Prices Moderate Amid Uncertain Outlook
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US Housing Market Slowdown: Inventory Rises, Prices Moderate Amid Uncertain Outlook
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The US housing market continues to show signs of cooling as we move through the second quarter of 2025. Recent data indicates year-over-year price growth has dipped to 2.5% in March, reflecting a significant slowdown compared to previous months[1]. This aligns with expert predictions that home price appreciation will average around 2% for 2025, down from 4.5% growth seen in 2024[4].
A notable development in the past 48 hours has been the release of Zillow's May 2025 update, which reveals record price cuts and rapidly rising inventory levels across multiple markets[2]. This represents a shift from the extreme supply constraints that characterized much of 2023 and 2024.
Despite this inventory growth, housing supply remains below historical averages nationally. Single-family existing homes for sale are up approximately 20% year-over-year but still hover 20-30% below prior record lows[3]. However, new homes for sale have reached 481,000 units, the highest level since 2007, while speculative homes for sale stand at 385,000, the highest since 2008[3].
The market remains challenged by elevated mortgage rates, though March saw lower rates that increased pending sales activity by roughly 12% year-over-year[1]. This modest improvement hasn't fundamentally altered what J.P. Morgan describes as a "largely frozen" housing market expected to continue through 2025[3].
Industry experts anticipate subdued growth of 3% or less throughout 2025, with demand remaining exceptionally low as measured through existing home sales[3]. The ongoing impact of tariffs and policies from the new presidential administration adds uncertainty to the market outlook[4].
For prospective homebuyers, 2025 continues to present challenges despite marginal improvements in inventory and potential mortgage rate stabilization. The combination of elevated prices and still-tight supply means affordability remains a significant hurdle for many Americans seeking homeownership in the current environment.
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