Will Home Prices Fall in 2025?

What Will It Take for Home Prices To Come Down?

You may be wondering if a significant drop in home prices is on the horizon. In fact, some people might even hope for a price decrease to make homeownership more affordable. However, experts agree that a crash isn’t likely to happen – and here’s why.

The primary reason is simple: there are more people wanting to buy homes than there are homes available for sale. This imbalance keeps prices high.

Let’s take a closer look at why, on a national level, home prices aren’t expected to decrease anytime soon.

The Role of Supply and Demand

The housing market operates like any other market – when demand outpaces supply, prices increase.

In the U.S., there’s currently a significant housing shortage, with several million fewer homes available than buyers seeking them. This mismatch is the driving force behind rising prices. David Childers, President of Keeping Current Matters (KCM), explains it clearly:

“The main driving force on pricing is the limited amount of inventory in most markets across the country. That issue is not going to be solved overnight or in the next twelve months.”

How Did This Happen?

For over 15 years, homebuilders haven’t constructed enough homes to meet buyer demand. After the 2008 housing crisis, homebuilding slowed drastically and has only recently started to recover.

Even with new construction picking up in the last few years, builders are still catching up. According to AmericanProgress.org, the pace of new construction isn’t enough to meet current demand, let alone make up for the years of underbuilding.

As long as the housing shortage persists, home prices are likely to remain stable or continue rising in most markets.

What About Next Year?

Most experts predict that home prices will rise again next year but at a slower, healthier pace.

It’s important to remember that housing trends vary by market. National trends might not fully reflect what’s happening in your local area. In markets with more inventory, price growth could slow or even decline slightly. But in areas where inventory remains tight, prices are likely to keep climbing.

This makes working with a local real estate expert essential. They can provide insights into your specific market and help you understand the factors affecting home prices in your area.

Bottom Line

If you’re asking what it will take for prices to drop, the answer comes back to supply and demand. With limited inventory in most markets, home prices are expected to remain steady or rise.

To get a clearer picture of what’s happening with home prices in our area, let’s connect. I’d love to help you understand the market and create a plan that works for your goals.