Will Home Prices Fall in 2025? What Rising Inventory Means for Buyers & Sellers

The U.S. housing market is undergoing significant changes in 2025, with rising inventory levels expected to impact home prices, buyer demand, and overall affordability. While an increase in available homes typically leads to price stabilization, factors like mortgage rates, economic shifts, and regional job markets will ultimately determine whether home prices drop—or hold steady.

If you’re thinking about buying or selling in Scottsdale, Phoenix, or the surrounding Arizona markets, here’s what you need to know about how the market is shifting and what it means for you.

Housing Inventory is Rising in 2025

More homes are hitting the market, giving buyers greater choices and shifting conditions away from the aggressive seller’s market of recent years.

• In some metro areas, like Washington, D.C., housing inventory has increased 56% year-over-year, well above the national increase of 28% .
• A combination of new listings and slower buyer activity is contributing to the market’s expansion, particularly in high-demand areas.
• New construction, including townhomes and condos, is helping boost inventory levels across various markets.

What This Means for Buyers & Sellers

📌 For Buyers: More inventory means more negotiating power and less competition, making it an excellent time to find a home.
📌 For Sellers: Homes that are strategically priced and marketed well will still attract buyers, but overpricing may lead to longer days on market.

Will Home Prices Drop in 2025?

While increased supply typically cools price growth, other factors like mortgage rates and local demand still play a major role.

• Nationally, home prices have remained stable, with the median home price rising 3.8% year-over-year to $398,400 .
• Some high-inventory markets, like Washington, D.C., have seen a slight 1.6% price decline, compared to a 0.2% dip nationwide .
• Seller expectations remain high, meaning significant price cuts aren’t happening across the board—at least not yet.

What This Means for Buyers & Sellers

📌 For Buyers: Home prices aren’t crashing, but some areas may offer better deals, especially for motivated sellers.
📌 For Sellers: Pricing competitively is key—overpricing will likely lead to longer listing times and potential price reductions later.

Mortgage Rates & Affordability Challenges

Mortgage rates remain one of the biggest hurdles for buyers in 2025.

• Economists predict that 30-year mortgage rates will average 6.9% in 2025 and around 6.5% in 2026 .
• High mortgage rates, combined with elevated home prices, continue to limit affordability for many first-time buyers.
• While home price growth is slowing, higher borrowing costs offset potential savings for buyers.

What This Means for Buyers & Sellers

📌 For Buyers: If rates drop slightly later in 2025, buyer demand may increase, leading to more competition and firmer prices.
📌 For Sellers: Buyers facing affordability constraints may be more hesitant to submit high offers, making competitive pricing and strategic marketing crucial.

Regional Market Variations: Not All Areas Are Equal

Not every market will experience price declines or buyer-friendly conditions—some regions remain highly competitive.

• Areas with strong job markets and economic growth, like Phoenix & Scottsdale, may continue to see stable or even rising prices.
• Markets impacted by federal layoffs or economic slowdowns, like Washington, D.C., could see sharper price corrections.
• Luxury and high-end real estate markets may respond differently than entry-level housing due to different buyer demographics and investment motivations.

What This Means for Buyers & Sellers

📌 For Buyers: Research local trends, as some markets may present better opportunities for negotiation than others.
📌 For Sellers: Don’t assume all markets are cooling—Scottsdale and Phoenix continue to have strong demand, especially in high-end segments.

Final Thoughts: What to Expect in 2025’s Housing Market

With rising inventory and affordability challenges shaping the market, buyers and sellers must adjust their strategies to succeed.

✅ More homes on the market = better opportunities for buyers.
✅ Price stability means sellers must price strategically to attract offers.
✅ Mortgage rates remain a key factor in market activity.
✅ Scottsdale & Phoenix markets continue to show resilience with steady demand.

Whether you’re buying, selling, or investing, navigating this evolving market requires the right strategy.

Let’s Talk About Your Real Estate Goals

Thinking about buying or selling in Phoenix, Scottsdale, or surrounding areas? I provide market insights, AI-powered marketing strategies, and expert negotiation skills to help you get the best results.

📩 Email: jeff@conniecollagroup.com
📞 Phone: +1 602 550 1114
🌐 Website: www.bestscottsdaleagent.com
📱 Instagram: www.instagram.com/jeff.azrealtor
👍 Facebook: www.facebook.com/jeff.azrealtor/