The U.S. housing market is displaying clear signs of normalization as inventory climbs past key thresholds. In May 2025, the number of active listings surged to around 1,036,000—marking the first time since winter 2019 that listings exceeded 1 million units. The broader trend continued into June, with active listings rising approximately 28–29% year‑over‑year to roughly 1.36 million—a post‑pandemic high although still slightly below pre‑2020 norms.
With more homes on the market, many regions—especially in the South and West—have now returned to or exceeded inventory levels seen before the pandemic. In contrast, markets in parts of the Northeast and Midwest remain constrained and under-supplied.
As supply outpaces demand, the balance is shifting toward homebuyers. Redfin reports there are now approximately 1.9 million sellers and 1.5 million buyers in the market—a deficit of half a million buyers compared to sellers—the widest gap since March 2020. This imbalance is driving greater negotiating leverage for buyers, with price reductions and seller concessions increasingly common.
Nearly one in five listings featured price cuts in May and June—levels last seen in 2016—while homes are staying on the market longer, averaging 53–57 days before sale. Pending‑sale cancellations have surged as well, with the rate reaching the highest since 2017 and hovering around 15% in May and 14.3% in April—in both cases indicating growing buyer hesitation.
Additional buyer-advantage signals include a median list‑to‑sale price gap of 7%, meaning buyers often pay around 7% less than the original listing price—another sign of a cooling market.
While home prices continue to rise modestly in some areas, year-on‑year gains have slowed sharply. By mid‑2025, national median list prices were up just 2.2% year‑over‑year—the smallest such growth in nearly two years. In several major metros—including Phoenix, Tampa, Austin, and Oakland—home prices have already turned negative, with declines ranging from 1.7% to as much as 6.7%.
Redfin’s latest forecast suggests a national median home‑sale price decline of approximately 1% year‑over‑year by the fourth quarter of 2025, following flat growth in Q3. Zillow’s projections similarly call for a 1–1.4% drop in prices by year‑end. Experts caution that while not a major crash, this softening marks a notable departure from sustained price increases since 2012.
Several factors are coming together to reshape the housing market dynamics. One is the lingering impact of pandemic-era mortgage rate lock‑ins. Many owners who secured ultra-low interest rates in 2020–2021 remain reluctant to sell. However, that effect is beginning to ease as life circumstances prompt some owners to list despite current mortgage rates hovering between 6.8% and 7%.
New construction is another driver. Regions that ramped up homebuilding over the past few years—especially in the South and West—are now seeing inventory recover to pre‑pandemic levels. Conversely, areas that underbuilt during that time remain undersupplied, resulting in a bifurcated national market.
Economic uncertainty is also dampening buyer enthusiasm. High borrowing costs and stretched affordability have many would-be buyers sitting on the sidelines. This contributes to lower sales velocity, giving remaining buyers more time and leverage to negotiate better deals.
Not all markets are moving uniformly. The South and West show the most pronounced buyer-favoring trends—with greater supply surges, longer days on market, and deeper price reductions in cities such as Phoenix, Tampa, Austin, and Denver. In contrast, many metro areas in the Northeast and Midwest still face low inventory and modest or positive price growth—suggesting a split market shaped by local supply and demand conditions.
For buyers, this is a rare window of opportunity. Inventory-rich markets now offer more choices and stronger negotiating power. Properties that have lingered on the market for several weeks are especially ripe for price reductions, seller concessions, or mortgage-rate buydowns. With wages rising at an estimated pace of 4% annually and the expected price decline of 1%, affordability is showing slight improvement even in the face of high mortgage rates. Waiting until year-end may only yield modest additional savings, so acting now could accelerate equity building.
For sellers, a shift in strategy is necessary. Accurately pricing a home from the outset is critical, as overpricing often leads to prolonged listings, eventual discounts, or even delisting. In May and June, delistings rose sharply, with some markets seeing a year-over-year increase of up to 47%. Concessions—such as covering closing costs or making repairs—are becoming more common as sellers seek to differentiate their listings in a competitive environment.
As of mid‑2025, the U.S. housing market is transitioning from a tight seller’s market into a more balanced, and in many areas, buyer-friendly environment. With active listings recently surpassing 1 million and forecasted to remain elevated, the power dynamic is shifting. Price growth is slowing, seller competition is rising, and buyers are in a stronger position than they’ve been in years.