Inventory Surge: Real's February 2025 Agent Survey Reveals Market Shifts

The housing market is experiencing a significant shift as inventory levels rise and listing times lengthen, according to Real's February 2025 Agent Survey. This trend is reshaping the dynamics of the market, offering both opportunities and challenges for buyers and sellers alike. Let's dive into the key findings and their implications for investors and homeowners.

Inventory Levels on the Rise

The survey reveals that 52% of agents reported higher housing inventory than last year, marking the 16th consecutive month of annual inventory growth. This surge in inventory is a clear indication that the market is becoming more balanced, with buyers having more options and greater negotiating power. The total number of unsold homes, including those under contract, increased by 18.2% compared with last year, further emphasizing the shift towards a buyer's market.

Lengthening Listing Times

One of the most notable trends highlighted in the survey is the lengthening of listing times. Homes spent an average of 66 days on the market in February 2025, which is five days more than last year. This increase in days on market is a direct result of the higher inventory levels, as sellers compete for attention in a more crowded market. As a result, sellers are being forced to adjust their price expectations and strategies. For instance, 49% of agents are advising sellers to set lower initial listing prices to attract buyers more quickly.

Price Reductions and Market Dynamics

The share of listings with price cuts grew to 16.8% in February 2025, up from 14.6% in February 2024. This trend suggests that sellers are increasingly adjusting to slower market conditions by reducing their asking prices. The median price of homes for sale in February 2025 was down 0.8% compared with last year, at $412,000. However, when accounting for a higher proportion of smaller homes on the market, the price per square foot still showed year-over-year growth. This indicates that home values continue to increase despite the overall price reduction.

Implications for First-Time Buyers and the Broader Economy

The rise in inventory and longer listing times have significant implications for the affordability of homes, particularly for first-time buyers. While the increase in inventory and longer listing times may make it more difficult for first-time buyers to afford homes, it could also lead to a decrease in home prices, which could have a negative impact on the broader economy. According to the U.S. News Housing Market Index, home sales are expected to remain low as long as mortgage rates remain well over the 6% level. This could lead to a decrease in consumer spending and a slowdown in economic growth.



Strategies for Sellers

In this shifting market, sellers need to be strategic in their approach. Advising sellers to set lower initial listing prices and investing in upgrades to attract buyers are key strategies. As Tamir Poleg, Chairman and CEO of Real, noted, "Higher inventory levels are giving buyers more options and greater negotiating power, but affordability still remains the biggest hurdle in today’s market." Sellers who overprice their homes are seeing longer days on market, while those who price more competitively or enhance their listings with staging and cosmetic improvements are securing more offers and faster sales.

Conclusion

The rise in inventory and lengthening of listing times, as reported in Real's February 2025 Agent Survey, are significant trends that are reshaping the housing market. While these changes present challenges for sellers, they also offer opportunities for buyers, particularly first-time buyers, to enter the market. As the market continues to evolve, it will be crucial for both buyers and sellers to stay informed and adapt their strategies accordingly.