US Housing Market in 2025: Mixed Signals Amid Slowing Growth and Inventory Shifts
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US Housing Market in 2025: Mixed Signals Amid Slowing Growth and Inventory Shifts
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About this listen
The US housing market is showing mixed signals as we move through May 2025, with recent data revealing both challenges and potential opportunities for buyers and sellers. After a brief period of growth during the early spring selling season, market improvements have stalled, suggesting further progress may be difficult to achieve this year.
According to the latest Morningstar report released yesterday, single-family home construction is expected to grow by 3% in 2025, while multifamily starts may decline by 4%. Experts anticipate a rebound in multifamily construction by 2026, indicating this year represents a low point for this sector. The report also notes that policies under the Trump administration could impact both housing demand and supply, with potential reductions in immigration affecting multifamily demand and construction labor availability.
J.P. Morgan's outlook suggests the housing market will remain "largely frozen" throughout 2025, with price growth continuing at a subdued pace of 3% or less. While housing inventory is increasing—single-family existing homes for sale are up roughly 20% year-over-year—levels remain near historic lows, approximately 20-30% below previous troughs.
Recent analyses from Bankrate indicate home-price appreciation will slow to an average growth of just 2% for 2025, compared to 4.5% in 2024. Would-be homebuyers continue to face discouragement from elevated mortgage rates and rising home prices, despite some signs of improvement in inventory levels.
The market currently shows signs of price adjustments, with Zillow's May 2025 update highlighting record price cuts and rapidly rising inventory in some areas. This suggests sellers may be becoming more realistic about pricing as the market continues to adapt to higher interest rates.
As we navigate these challenging conditions, industry leaders are focusing on sales incentives and adjusting construction plans to meet changing market demands, particularly in the more resilient single-family home sector.
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