Competitive US housing markets in 2025

- 24 April, 2025

KEY ISSUES

Housing market is beginning to see a large divide in price and inventory by region
Buyers, sellers, and investors of real estate must be informed by surround areas
The Northeast and Midwest comparatively are more aggressive than the Sun Belt
Buyers must look out for key things to obtain a comfortable price
Sellers must accommodate certain areas to remain competitive

The housing market today is a roller coaster

People in today’s economy are used to the housing market in constant fluctuation. But 2025 is an anomaly with the duration of jarring and unpredictable change. Buyers, sellers and real estate investors are beginning to see new roadblocks. Also, the blockers come with unforeseen opportunities with hyperlocal price changes, high inventory, and volatile buyer demand. Understanding today’s market trends, while difficult to tie down, is the key to buying, selling or investing in real estate.

Understanding the current housing market

Today’s national data markers are revealing a strong market transition. Zillow Home Value Indes shows price of homes increased by 1.2% YoY March 2024 to March 2025. While homes are still astronomically expensive, this is a cooling from 4.6% the year before. It is no secret that while some areas are seeing large gains, some are experiencing significant declines. Particularly in the Northeast and Midwest we’re seeing consistent price increases. A lower inventory also means buyers need to purchase at higher rate and pay premiums reflecting this upward trend ().

Where we are seeing a decline in pricing is in states like Texas, Florida, Louisiana and Arizona. Housing inventory has skyrocketed past pre-covid levels. Prices are beginning to normalize, and builders are incentivizing buyers. This is having a large impact on the resale market putting downward pressures on housing prices.

Housing market shift contributors

Interest rates are having a devastating effect on the affordability of homes on the market. Higher rates are contributing to less buying power for households. The income to mortgage ration is officially 40%. This means while the previous rule of your rent or mortgage being 15% of your household income per month, now household incomes are basically cut in half every month just to cover payments.

While inventories around the country high, stand out regions like the Sun Belt states previously mentioned have inventories above pre-covid numbers. High inventory means less competition giving buyers the power in negotiations. Opposite of the Sun Belt states we see that competition is still very much alive in the Northeast and Midwest.

One area that experts and the public are believed to be overlooking is the economic and demographic factors in home buying. During the pandemic we saw many families flock to the Sun Belt states for lower cost cities. But being 5-years removed people are beginning to be recalled to the workplace or simply returning to the major metros. In these areas builders also bet big and oversupplied the region and are now feeling the effects. Post covid home builders are beginning to offer incentives contributing to the downward trend in home pricing.

Homebuyer tactics in today’s environment

The ever-shifting market is beginning to lessen the sting of intense buying battles and skyrocketing prices. Homebuyers will be focusing on undervalued metros. Areas experiencing declines such as Austin and Tampa offer buyers heavy discounts. Being aware of inventory and hiring an in tune real estate agent who understand local markets will open great opportunities.

When purchasing a new home, it is not uncommon these days to physically shop for mortgage rates. Checkout a couple lenders and compare prices and rates. These small differences in your mortgage rate will have a lasting impact on your monthly payments and overall loans costs.

Negotiating is your friend. Using negotiating power on softer markets will allow you to have more leverage. When entering discussions make sure that you open the conversation up to talk about concessions. Low hanging fruit that can benefit you are things like seller-paid closing costs. It is not uncommon when touring a property to see some small bumps and bruises which can benefit you.

Ask for these home repairs and/or updates to be completed prior to closing on a new home. Metrics are your secret weapon. When navigating the market do not forget to scan the surrounding area and inventory. You will be able to capitalize on inventory that has been on the market for a longer period. Request a lower purchase price if sellers are more opted to getting the home off the market.

Guiding home sellers during higher periods of competition

Contrary to the higher priced regions, markets where inventory has a higher shelf life and sellers must get creative. Reviewing recent sales and pricing a property accordingly, rather than depend on higher prices. A common mistake sellers are making today is holding onto hope that they will maximize the cost above market value. This can result in a property being listed longer and eventually deeper price cutting.

All agents take different approaches when marketing a particular property. What sellers must do is prop up their price with unique features that a home has to offer. When marketing a property have a photographer or content team create appeal marketing content. Professional photos, virtual tours and detailed staging will help draw potential buyers to your listing.

Flexibility is key. As stated in the buyer’s approach, the agent must be willing to make some concessions. Closing costs are becoming a hot topic as they’re beginning to be realized as an unnecessary extra on top of the cost of the home. If you tour the property yourself, make sure to highlight areas that need fixing or improved prior to placing a home on the market. Also entertaining contingent offers will help you stay competitive and close a deal sooner.

A forward-facing outlook for today’s housing market

Shifts in the market today are almost certain. Now to what degree is where uncertainty lies. Whether an individual is buying, selling or investing in real estate you must understand you’re the market. Understanding the current market will allow you powers to act confidently. National home prices are rising regardless. Regional differences are the outlier which must be taken into consideration. Stay informed, review tons of inventory on the market, and do not neglect price changes in your desired area. Real estate agents will help and give insight. But only you can gain the knowledge and facts that will help you navigate buying a home successfully in 2025.

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