The US housing industry is experiencing significant cooling across many regions, marking a clear shift from the overheated market conditions of the pandemic era. Over the past 48 hours, new reporting confirms that metros in the Sun Belt, like Cape Coral-Fort Myers and North Port-Sarasota-Bradenton in Florida, are among the coldest markets in 2025. Meanwhile, demand is surging in Northern and Rust Belt metros such as New Haven, Connecticut, and Rockford, Illinois. In these hot markets, home prices have jumped at least 9 percent year-over-year and inventory remains extremely tight, giving sellers continued bargaining power. In contrast, price reductions and longer listing times now characterize many Sun Belt markets, where new construction outpaced demand. This cooling is offering affordability relief for buyers in those regions, reversing the extreme seller advantage seen during the pandemic boom. Nationwide, home values are expected to dip by about 2 percent by year-end, according to Zillow forecasts. This moderation is seen as a market rebalance rather than a crash, with inventory rising and the market moving towards a more balanced role for buyers and sellers. The national average for 30-year mortgage rates remains elevated at about 6.9 percent, which continues to dampen buyer activity and keeps affordability a top concern. However, the increase in listings, now nearing pre-pandemic levels with a 4.6-month supply, is giving buyers more choice and greater negotiating power. Major builders are taking a cautious stance, with new home supply increasing but builder sentiment dropping to decade lows as a result of high construction costs and ongoing labor shortages. Regional dynamics are stark: while home values in California metros like San Francisco have declined 2.5 percent year-over-year, values in the Northeast are still rising, though at a slower pace than last year. Industry leaders are focusing on targeted launches and price incentives, while some are slowing new projects as they monitor consumer demand. Overall, conditions have shifted to what some economists describe as the most buyer-friendly summer in nearly a decade.

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