US Housing Market Update: May 2025

The US housing market continues to show signs of stagnation as we approach mid-2025. According to recent data released this week, the market remains largely frozen with subdued growth expected to continue throughout the year. Home price growth is projected to decelerate to approximately 3% or less in 2025, reflecting ongoing challenges in affordability and demand.

The spring housing market initially showed promising signs of growth, but these were short-lived according to Cotality's May 2025 insights published on May 6th. Further market improvements this year may prove challenging as mortgage rates remain a significant barrier for potential buyers.

In construction trends, single-family home building is expected to grow by a modest 3% in 2025, while multifamily starts are projected to decline by 4% before eventually rebounding, according to Morningstar's report from May 19th. This mixed construction outlook highlights the complex dynamics at play in different housing sectors.

Supply conditions present a nuanced picture. While existing home inventory remains historically low nationwide despite a 20% year-over-year increase, new home inventory has reached 481,000 units - the highest level since 2007. Speculative homes for sale have hit 385,000, a peak not seen since 2008, with both metrics significantly above their long-term averages.

The rental market is bracing for significant changes with over half a million apartment units expected to be delivered across the country in 2025 - one of the highest figures recorded since 2008. New York and Los Angeles will lead with approximately 35,000 and 19,400 new units respectively, while fourteen US markets are projected to receive more than 10,000 new apartment units each.

This substantial increase in multifamily supply, particularly in Sun Belt cities like Dallas, Austin, Houston, Charlotte, Raleigh, Atlanta, and Orlando, is anticipated to stabilize rents in many areas, potentially providing some relief in the rental market amid ongoing challenges in home buying affordability.

US HOUSING MARKET UPDATE: MAY 2025

The US housing market continues to face headwinds as we approach mid-2025, with recent data showing mixed signals for both buyers and sellers.

According to Zillow's forecast released just yesterday, home values are projected to fall by 1.4% in 2025, an improvement from their previous prediction of a 1.9% decrease. This decline comes as rising inventory puts downward pressure on home values across the country.

Existing home sales are now expected to reach 4.12 million in 2025, representing a modest 1.4% increase from 2024, though this projection has been revised downward from last month's forecast of 4.2 million.

The rental market shows diverging trends, with single-family rents projected to rise by 3.2% while multifamily rents will see a smaller increase of 2.1%.

J.P. Morgan's analysis indicates the housing market will remain "largely frozen" throughout 2025, with growth expected at a subdued pace of 3% or less. Supply conditions are shifting, with Michael Rehaut, head of U.S. Homebuilding Research at J.P. Morgan, noting that "new homes for sale are at 481K, the highest level since 2007."

For consumers, affordability remains challenging. The median existing home price stands at $403,700, up 2.7% year over year. April's mortgage rates averaged 6.71%, continuing to pressure potential buyers.

Construction trends show single-family home building expected to grow by 3% this year, while multifamily starts may decline by 4%.

Looking ahead, Fannie Mae predicts home prices will rise 4.1% year over year in 2025 before slowing to 2% in 2026, suggesting longer-term stabilization.

The combination of higher housing supply, moderating policy uncertainty, and small improvements in affordability should provide some relief to homebuyers in the coming months, though economic uncertainty continues to make the market's trajectory difficult to predict.

In the past 48 hours, the US housing industry continues to face significant shifts in both market activity and sentiment. According to Zillow’s latest May 2025 report, existing home sales are now projected at 4.12 million for the year, a modest 1.4 percent increase compared to 2024. However, this figure is a downward revision from last month’s estimate, reflecting ongoing market hesitation as buyers remain cautious amid economic uncertainties. Home values are expected to decline by 1.4 percent in 2025, with earlier forecasts predicting a steeper drop. The main causes are a soft start to spring sales and rising inventory, which has provided buyers with more options and put slight downward pressure on prices[1].

Nationally, supply is increasing, especially in new home construction. The inventory of new homes for sale has reached its highest level since 2007, with speculative homes for sale up 40 percent above long-term averages. Single-family existing homes for sale are up about 20 percent year over year but still sit well below historical lows[4]. The construction sector itself is seeing single-family starts expected to grow 3 percent in 2025, while multifamily starts are projected to decline 4 percent before a later rebound[3].

Mortgage rates have stabilized somewhat, and March saw pending sales activity jump by roughly 12 percent year over year, indicating some resilience as buyers adjust to the higher rate environment. Home price growth has slowed, dipping to 2.5 percent year over year in March, with Fannie Mae now forecasting a 4.1 percent increase for 2025[2][5].

On the rental side, Zillow projects single-family rental prices will rise by 3.2 percent and multifamily by 2.1 percent, mainly because the supply of rental listings has risen yet demand for single-family rentals remains strong[1].

Major housing industry leaders are responding by increasing new home incentives and focusing on affordable designs to capture hesitant buyers. Builders are also partnering with lenders to offer rate buydowns and flexible financing, while investors shift attention to single-family rentals.

Compared to a year ago, the US housing market is more balanced, with supply less constrained but demand still muted by affordability challenges, persistent inflation, and limited wage growth. There have been no major regulatory disruptions this week, but the industry remains watchful for policy changes ahead.

US Housing Market Update: May 2025

The US housing market continues to face challenges in May 2025, with recent data showing mixed signals for both buyers and sellers. According to Zillow's latest forecast released on May 21, home values are projected to fall by 1.4% this year, which is an improvement from their previous expectation of a 1.9% decrease[1]. This downward pressure on home values is primarily attributed to rising inventory and soft sales volume this spring.

Existing home sales are now projected to reach 4.12 million in 2025, marking a modest 1.4% increase from 2024[1]. This figure has been revised downward from last month's forecast of 4.2 million. While buyers now have more options and time to make decisions, they appear hesitant due to lingering economic uncertainty.

In the rental market, Zillow projects single-family rents will rise by 3.2% in 2025, while multifamily rents will increase by 2.1%[1]. Despite lower rent increases expected this year, strong demand for single-family rentals is likely to keep rent growth relatively stable.

Construction trends show diverging paths for different housing types. Single-family home construction is expected to grow by 3% in 2025, while multifamily starts may decline by 4%, though a rebound is anticipated by 2026[3]. Homebuilder sales incentives continue to attract buyers to new construction despite the challenging market conditions.

According to J.P. Morgan's analysis from February, the housing market is likely to remain "largely frozen" through 2025, with price growth expected at a subdued pace of 3% or less[4]. Supply conditions vary across the country, with new homes becoming fairly plentiful while existing home inventory, though improving, remains below historical averages.

Recent data from March showed year-over-year price growth dipping to 2.5%, with lower mortgage rates boosting pending sales activity by approximately 12% compared to the same period last year[2]. Experts predict home-price appreciation will slow to an average growth of 2 percent for 2025, compared to 4.5 percent growth in 2024[5].

US Housing Market Analysis: May 2025 Update

The US housing market continues to evolve with notable shifts in inventory and pricing. As of May 2025, housing inventory has increased significantly, showing nearly 20% growth year-over-year. This marks the highest level of available homes since before the pandemic began, with April 2025 recording a remarkable 30.6% increase in listings compared to the previous year.

The national median home price reached $403,700 in March 2025, representing a 2.7% increase from last year and setting a new record for the month. Industry leaders are forecasting continued price appreciation throughout 2025, with 21 out of 23 major organizations predicting an average increase of 2.7%.

Regional variations are becoming more pronounced, with the South and West experiencing the largest inventory growth at 31.1% and 40.3% respectively. The Midwest and Northeast are also seeing increased inventory, though at more modest levels of 17.7% and 11.3%.

Mortgage rates are currently averaging around 6.86%, slightly decreased from earlier highs but still elevated compared to pre-2022 levels. This continues to impact buyer sentiment, with pending home sales declining by 3.2% despite the surge in available homes.

The rental market is also seeing changes, with the national average rent now approximately $2,005, marking a 3.5% year-over-year increase.

Affordability remains a significant challenge, with a recent survey indicating only 36% of Americans are satisfied with local housing conditions, a notable decline from previous years.

In Texas, the market reflects broader national trends with a projected median home price of around $350,000 by year-end.

The growing inventory may create improved opportunities for first-time homebuyers, potentially giving them more negotiation leverage as the market continues to adjust to these evolving conditions.

In the past 48 hours, the US housing industry has shown clear signs of transition as both buyers and sellers adjust to changing market realities. National home values are now forecast to drop by 1.9 percent in 2025, a reversal from previous expectations of slight growth. This shift is driven by a sustained increase in available listings and persistently high mortgage rates, which are now expected to end the year close to 6.5 percent. Sellers are responding by cutting prices at record rates in an effort to attract cautious buyers, while purchasers are taking more time to decide, capitalizing on increased inventory and negotiating power.

Despite home price declines, existing home sales are projected to reach 4.2 million this year, up 3.3 percent from 2024. The spring selling season brought a temporary surge in activity, but this momentum is already slowing as the market returns to seasonal norms. As affordability remains a challenge, many potential buyers are opting to rent, putting upward pressure on the single-family rental sector. Rents for these homes are expected to rise 3.1 percent in 2025, while multifamily rents will see a slower increase of 2.1 percent.

New home supply is at its highest level since 2007, with speculative inventory at levels not seen since 2008. In fact, single-family homes for sale have climbed roughly 20 percent year-over-year, reflecting a 50 percent jump above long-term averages for new properties. However, overall supply is still below historic highs, and housing market activity remains subdued, with growth projections under 3 percent. Builders and major industry players are increasing incentive packages, such as rate buydowns and flexible closing terms, to move inventory and maintain cash flow.

Consumer behavior is shifting as affordability concerns dominate. Many buyers are delaying purchases, and industry leaders have responded by launching more affordable home models and expanding partnerships with financial institutions to offer innovative lending solutions. No major regulatory changes or market disruptions have emerged this week, but uncertainty about the direction of inflation and interest rates lingers over the sector.

Compared to early 2025, when modest growth was forecast, the market is now described as frozen but not contracting sharply. Leaders remain focused on flexibility, cost management, and supporting buyers with new financing tools as the industry waits for clearer economic signals.

In the past 48 hours, the US housing industry has been grappling with persistent stagnation after a brief period of optimism earlier this spring. Recent data shows the national average home value stands at 367,711 dollars, representing a modest 1.4 percent annual increase. This signals a cooling from the rapid growth seen in previous years. Supply dynamics are shifting as new homes listed for sale have reached 481,000 units, the highest since 2007, and speculative homes for sale are at 385,000, also at a multi-year high. These numbers are roughly 50 and 40 percent above their long-term averages respectively. Even so, the inventory of single-family existing homes remains tight by historical standards, still about 20 to 30 percent below previous lows, even after a 20 percent year-on-year increase.

Despite the greater availability of new properties, consumer demand remains subdued, with existing home sales at historic lows. The market outlook for the rest of 2025 remains tepid, with analysts projecting overall growth to stay below 3 percent. This slow pace is attributed to elevated mortgage rates, lingering affordability challenges, and uncertainty among buyers and sellers alike.

In terms of market disruptions, sellers have responded to rising inventory by implementing record price cuts in several regions, a trend confirmed by recent Zillow analytics. Meanwhile, regulatory activity remains focused on upholding fair housing standards, with continued enforcement actions to address discrimination in rental practices.

Industry leaders are adapting by emphasizing digital tools to attract buyers, offering incentives such as mortgage buydowns and more flexible terms, and prioritizing speculative construction to meet evolving demand. Nevertheless, their strategies are constrained by broader economic and regulatory headwinds.

Compared to prior months, the surge in new home listings is notable, but the lack of corresponding demand continues to weigh on the market. Affordability remains a top concern for consumers, driving a shift toward smaller homes and less expensive markets. Overall, the US housing sector is characterized by an unusual combination of rising supply, cooling prices, and hesitant demand, a stark contrast to the heated conditions of past years.

US Housing Market Update: Mixed Signals in May 2025

The US housing market is showing mixed signals as we move through May 2025, with recent data revealing both challenges and potential opportunities for buyers and sellers. After a brief period of growth during the early spring selling season, market improvements have stalled, suggesting further progress may be difficult to achieve this year.

According to the latest Morningstar report released yesterday, single-family home construction is expected to grow by 3% in 2025, while multifamily starts may decline by 4%. Experts anticipate a rebound in multifamily construction by 2026, indicating this year represents a low point for this sector. The report also notes that policies under the Trump administration could impact both housing demand and supply, with potential reductions in immigration affecting multifamily demand and construction labor availability.

J.P. Morgan's outlook suggests the housing market will remain "largely frozen" throughout 2025, with price growth continuing at a subdued pace of 3% or less. While housing inventory is increasing—single-family existing homes for sale are up roughly 20% year-over-year—levels remain near historic lows, approximately 20-30% below previous troughs.

Recent analyses from Bankrate indicate home-price appreciation will slow to an average growth of just 2% for 2025, compared to 4.5% in 2024. Would-be homebuyers continue to face discouragement from elevated mortgage rates and rising home prices, despite some signs of improvement in inventory levels.

The market currently shows signs of price adjustments, with Zillow's May 2025 update highlighting record price cuts and rapidly rising inventory in some areas. This suggests sellers may be becoming more realistic about pricing as the market continues to adapt to higher interest rates.

As we navigate these challenging conditions, industry leaders are focusing on sales incentives and adjusting construction plans to meet changing market demands, particularly in the more resilient single-family home sector.

Over the past 48 hours, the US housing industry has shown clear signals of transition, marked by rising inventory levels, a moderation in price growth, and shifting dynamics between buyers and sellers. The latest data from the National Association of Realtors indicates that total housing inventory reached 1.33 million units at the end of March, an 8.1 percent increase from February and nearly 20 percent higher than March 2024. Newly built homes now account for over 31 percent of all homes for sale, further expanding choices for buyers, particularly in the South and West, where inventory grew 31 and 40 percent year-over-year respectively.

Despite this inventory surge, housing affordability remains a challenge. The national median existing-home price has climbed to a record $403,700, up 2.7 percent from a year ago. Numerous industry analysts, including those at Bankrate, expect home price growth to slow to around 2 percent in 2025, down from 4.5 percent in 2024. This moderation is being fueled by sellers becoming more realistic, as evidenced by a spike in price cuts and a narrowing gap between buyer and seller expectations. Zillow recently predicted a potential decline in home prices in the near term, which experts view as healthy for rebalancing the market.

Mortgage rates are holding steady around 6.7 percent, and hopes for Federal Reserve rate cuts later this year persist, though these have yet to materialize. Elevated mortgage rates, along with high prices, continue to discourage some would-be buyers from entering the market.

Supply chain disruptions appear less severe than in prior years, and increased availability of new homes is giving buyers more leverage in negotiations. Major builders and industry leaders are focusing on ramping up new construction and offering incentives. Speculative home listings are at their highest since 2008, signaling greater confidence among developers.

Regulatory uncertainties, including ongoing trade tensions and the possible impact of the new presidential administration, remain notable wild cards for the industry’s outlook. Compared to last year, the current market is marked by greater activity, more realistic pricing, and the first genuine signs of improved affordability for buyers, even as overall conditions remain challenging for many households.

The US housing industry over the past 48 hours continues to show clear signs of transition, driven by rising inventory, shifts in consumer expectations, and new pressures on affordability. Inventory is up meaningfully, with the total housing inventory at 1.33 million units at the end of March, an 8 percent rise from February and nearly 20 percent higher than March 2024. This rise is seen most strongly in the South and West, where inventory jumped more than 30 percent year-over-year, giving buyers increased negotiating power and more choices, especially among newly built homes, which now account for over 31 percent of all homes for sale. Supply levels, particularly for new homes, have reached their highest since before the 2008 crisis, with 481,000 new homes and 385,000 speculative homes on the market—about 50 percent and 40 percent above long-term averages, respectively.

However, prices remain elevated. The national median existing-home sales price reached a record $403,700, up 2.7 percent from the previous year. Industry forecasts expect price growth to slow compared to 2024, with projected appreciation around 2 to 3 percent for 2025. Sellers are now more willing to cut prices, as reflected in a recent surge of price reductions, and the gap between buyers and sellers is narrowing. These moves could create more entry opportunities for first-time buyers, though affordability is still a major hurdle due to high mortgage rates.

Consumer behavior is showing cautious optimism, with buyers encouraged by greater inventory but still held back by high costs and borrowing rates. Market leaders are responding with increased promotional activity, more flexible financing, and greater emphasis on new constructions to address supply gaps. No major regulatory changes or disruptive partnerships have been announced in the past week, but ongoing uncertainty around tariffs and national economic policy continues to shape the landscape.

Compared to earlier this year and last year, the market is less constrained by supply, but affordability challenges and uncertainty about economic policy still weigh heavily on sentiment. Unless mortgage rates decline or policy changes spur greater affordability, the outlook remains one of gradual adjustment rather than rapid recovery.