“Everyone’s asking: Is the housing market about to crash? I don’t think so—but we are in for a shift that savvy buyers and investors should watch closely.”

Why Softening Home Prices Signal a New Phase—Not a Crash

According to Altos Research, as reported in HousingWire (June 2025), U.S. home prices are showing their softest performance in years, with a national increase of just 0.55% year-over-year. Meanwhile, 11 states have reported price declines compared to 2024, mostly concentrated in the Sun Belt. Inventory has finally caught up after the pandemic-era shortage, reaching 826,000 unsold single-family homes, a 32% increase over last year.

But while prices are losing steam, home sales volumes are starting to climb, suggesting a complex but stabilizing market ahead.

Key Insights for the Rest of 2025

1. Inventory Is Back—And It’s Changing the Pricing Game

After three years of scarcity, listings are finally back in pre-pandemic territory. This rise in inventory has taken the upward pressure off home prices in many markets.
Think of it like this: too many apples at the farmer’s market? Prices drop. The same logic applies here. Especially in Sun Belt states like Florida, Texas, and Arizona, where unsold inventory has surged, we’re seeing the most visible price pullbacks.

2. Demand Is Tepid—But Not Dead

Despite high mortgage rates, some buyers are re-entering the market. Spring sales volumes have finally begun outpacing 2024 levels, though still far from peak. This suggests that demand isn’t vanishing—it’s just cautious. With rates still in the 6–7% range, buyers are being selective, and sellers are being forced to adjust.

3. April Was a False Alarm—Don’t Read Too Much Into It

Much of the current pessimism stems from April’s data, when financial turmoil—tariff concerns, a spooked stock market, and surging mortgage rates—froze activity. But May and early June tell a different story: the stock market rebounded, buyers returned, and pending home prices started ticking up again.

4. Price Reductions Signal a Power Shift

Nearly 40% of active listings have cut their prices—a 15-year high for June. That’s not a collapse; it’s a rebalancing. Sellers no longer hold all the cards, especially those who overpriced in March or April. Smart sellers are pricing to meet today’s cautious buyers.

What Should You Do Right Now?

Whether you’re a buyer, seller, or investor, here’s how I’d think about your next move:

• For Buyers: This may be your best window in years to negotiate price or terms. Focus on Sun Belt markets with high inventory and declining prices.
• For Sellers: Price your home strategically, not sentimentally. Overpricing in this market means getting buried in reductions—and time on market kills deals.
• For Investors: Watch for motivated sellers in overbuilt markets. With price momentum slowing, buy-and-hold strategies with solid rental yield matter more than quick appreciation plays.

What Does “Downside-Stickiness” Mean?

What is downside-stickiness in housing prices?
It’s the tendency of home prices to resist falling because sellers don’t want to accept less than their home’s perceived value. Most homeowners would rather wait or rent out than sell at a loss—especially if they have low mortgage rates and strong equity positions.

Reader Q&A

Is now a good time to buy a home, or should I wait?

If you’re buying long-term, this is a solid window—especially in high-supply areas. Just be cautious and negotiate well.

Will home prices drop across the board?

Unlikely. While many states are softening, the market still has geographic pockets of strength—especially where inventory remains tight.

What if I bought at the peak?

Don’t panic. Unless you need to sell right now, ride it out. Long-term fundamentals still support price growth over time.

Final Thought: Keep Your Eye on Mortgage Rates

Mortgage rates remain the wildcard. If they drop in the second half of 2025, we could see a demand surge that stabilizes or even lifts prices modestly. But if rates stay sticky or go higher? Expect more reductions and extended time on market.Tech tools like Altos Research, Redfin Data Center, or Realtor.com’s local trend dashboards can help you track these shifts in real-time. Data-driven decisions are no longer optional in this evolving market—they’re your competitive edge.