The U.S. housing market is undergoing a notable transformation, with data from mid-June 2025 indicating a significant shift in power from sellers to buyers. Nationwide residential inventory has surged past one million active listings—levels not seen since the pre-pandemic winter of 2019. This sudden expansion in supply is reshaping market dynamics, extending listing times, and prompting widespread price cuts.
According to housing analysts and national brokerage data, the average time a home stayed on the market in May increased to 38 days, up from just 27 days a year earlier. This prolonged timeline is contributing to pressure on sellers, who are responding by slashing prices. About 20% of all active listings in May saw a price reduction, while 37% of newly built homes in June included some form of price cut.
For homebuilders, this slowdown has prompted a pivot toward buyer incentives. Many are now offering assistance with closing costs, mortgage rate buydowns, or bonus amenities like upgraded appliances to entice hesitant buyers.
“With inventory up and competition easing, buyers now have a unique opportunity to shop with more confidence and less urgency,” said Danielle Hale, chief economist at Realtor.com. “This is a dramatic shift from the frenzied post-pandemic market, where homes were flying off the shelf within days.”
The sharp increase in housing supply is driven by a combination of factors. Builders have ramped up completions after years of supply chain bottlenecks, while more existing homeowners are finally listing their properties after years of holding back. Simultaneously, investors—facing declines in rental income and reduced home appreciation—are also offloading properties.
Investor activity, once a dominant force in pandemic-era housing booms, is cooling. Following nearly two years of falling rents in major metro areas, investor-owned properties are being listed for sale at higher rates. In cities like Phoenix and Austin, investor offloads have accounted for a significant share of new listings in the past two quarters.
Mortgage rates, however, remain a headwind for many would-be buyers. The average rate on a 30-year fixed mortgage stood at 6.81% in mid-June—elevated compared to the historically low rates seen during the pandemic, though slightly down from earlier spring highs. The Federal Reserve has signaled caution in cutting interest rates, emphasizing inflation control, though modest declines in mortgage rates are expected by year-end.
Despite the high borrowing costs, consumer sentiment is rising. The Fannie Mae Home Purchase Sentiment Index reached a three-year high in May, reflecting a growing belief that conditions are becoming more favorable for buyers. Many are taking advantage of longer listing times to negotiate deals, secure inspections, and avoid bidding wars—luxuries not available in the recent high-velocity market.
“The emotional fatigue of the past few years—rapid bidding, waived contingencies—is giving way to a more rational, balanced environment,” said Lisa Sturtevant, chief economist at Bright MLS. “Buyers can make informed decisions now without the pressure cooker effect.”
Geographic differences remain. Markets in the South and West are seeing the steepest inventory growth, with cities like Tampa, Denver, and Las Vegas reporting a significant share of price-reduced listings. In contrast, tighter inventory and stronger demand persist in parts of the Midwest and Northeast, though even there, buyers are beginning to regain some leverage.
For sellers, the shift represents a new reality. Gone are the days of instant offers and above-asking-price deals. Today’s market requires strategic pricing, home staging, and patience. Builders, in particular, are expected to continue offering incentives through the fall in an effort to move inventory without resorting to deep price cuts that might hurt long-term valuations.
Analysts suggest that the next six months could present a rare window for buyers—especially those with flexible financing or cash reserves—to secure homes at more favorable terms. As market equilibrium gradually returns, experts advise both buyers and sellers to approach transactions with clear expectations and informed strategies.
While broader economic uncertainty lingers, particularly regarding inflation and potential interest rate movements, the housing market is inching toward a balance not seen in years. This normalization could foster long-term stability after the turbulence of the pandemic-era boom and subsequent cooling.
Source: MarketWatch