Home Buyers Are Finally Getting the Upper Hand Again

After years of a seller's market, home buyers are finally starting to gain the upper hand in the housing market. The increase in home inventory, coupled with a potential decline in mortgage rates, is shifting the balance of power in favor of buyers. Let's explore how these trends are shaping the market and what homebuyers can expect in 2025 and beyond.



Increasing Home Inventory

According to Realtor.com, the number of homes actively for sale grew by 24.6% in January 2025 compared to the same time last year, marking the 15th consecutive month of annual inventory growth. This increase in listings is a significant shift from the inventory shortages experienced in recent years. Additionally, newly listed homes increased by 10.8% over the same time last year, indicating that more sellers are returning to the market.



Moderate Home Price Growth

With more inventory available, home prices are expected to grow at a modest rate in 2025. Zillow forecasts home values to grow by 2.6% nationally, a significant slowdown from the rapid price increases seen in recent years. This moderation in price growth is another indicator that the market is shifting in favor of buyers.

Mortgage Rate Fluctuations

Mortgage rate fluctuations will play a significant role in determining the affordability and accessibility of homes for buyers in 2025. According to the U.S. News Housing Market Index, mortgage rates are expected to range from about 6% to 7% unless there is a recession, with short-term lending rates continuing to fall through 2026. If mortgage rates remain relatively high, transactions will be based more on households making moves due to changes in jobs, finances, or household composition. However, if mortgage rates manage to fall faster, then pent-up demand from the last few years could be unleashed, with volumes returning more to historic norms.



Changing Preferences of Homebuyers

The changing preferences of homebuyers are also shaping the housing market in 2025 and beyond. Homebuyers are increasingly prioritizing wellness amenities, nature-inspired design, and private spaces in their homes. This trend is likely to drive demand for properties with these features or the potential to add them, potentially driving up prices for these properties.

Conclusion

The increase in home inventory, coupled with a potential decline in mortgage rates and the changing preferences of homebuyers, is shifting the balance of power in the housing market in favor of buyers. Homebuyers can expect a more competitive market with more options and less competition, while sellers may need to be more patient and flexible in their pricing expectations. As the market continues to evolve, it is essential for homebuyers to stay informed about market conditions and make decisions based on their individual financial situations.