The current state of the US housing industry is characterized by a mix of positive and negative trends. On the positive side, new listings for existing homes were up 10.8% year-over-year in January 2025, according to Realtor.com's Monthly Housing Market Trends Report[1]. This increase in new listings is a welcome sign, as inventory levels have been a major constraint in the housing market. Active inventory was up 24.6% year-over-year in January, but it is still 22.1% below the same week in 2019[1].

Despite the increase in inventory, the housing market is expected to remain largely frozen through 2025, with some growth expected at a very subdued pace of 3% or less[2]. Demand remains exceptionally low, and housing inventory is still below historical averages. New home inventory is at its highest level since 2007, but single-family existing homes for sale are up only 20% year-over-year and remain near record lows[2].

In terms of sales, existing home sales were up year-over-year for the third consecutive month in December 2024, but the seasonally adjusted annual rate of 4.24 million is still below pre-pandemic levels[1]. New home sales were up 6.7% year-over-year in December 2024, but the seasonally adjusted annual rate of 698,000 is still below the long-term average[1].

The multifamily market is also experiencing a slowdown, with rent growth essentially flat in 2024, according to Moody's Analytics CRE[4]. However, the average effective rent remains more than 20% higher than in 2019, and the overall vacancy rate finished at 6.1%, up slightly from 5.7% at the end of 2023[4].

Mortgage rates have shown signs of decline, with projections for 2025 suggesting rates averaging around 6.36% for a 30-year fixed-rate mortgage[5]. This decline in mortgage rates, combined with increasing housing inventory, may enhance affordability and make it a favorable time for buyers to enter the market[5].

In response to current challenges, US housing industry leaders are focusing on strategic pricing and competitive marketing. Sellers need to adjust their expectations regarding rapid price appreciation and price their properties appropriately to attract buyers[5]. Builders and developers are also responding to the decline in mortgage rates, with new construction starts increasing in recent months[3].

Overall, the US housing industry is experiencing a slowdown, but it is not expected to crash in 2025. Instead, experts anticipate a correction, with factors such as high mortgage rates, low inventory, and inflation influencing the market[5]. As the market continues to evolve, industry leaders will need to adapt to changing consumer behavior, price changes, and supply chain developments.

This content was created in partnership and with the help of Artificial Intelligence AI