How Rising Inventory Levels Could Shape the 2025 Housing Market

US housing inventory is gradually inching back to pre-pandemic levels, and the influx could foreshadow a reprieve for homebuyers in 2025.

According to tracking by realtor.com, active listings have increased nationally by 26.2% over the past 12 months, the highest annual bump since December 2019. While housing inventory typically experiences seasonal upswings in the winter as homebuying activity cools, homes today stay on the market for longer compared to what we have normally seen in the post-pandemic winter months.

In November of this year, the median number of days a home spent listed on the market was 62, the highest during the month of November since 2019. Amid the post-COVID home affordability crisis, increased inventory could place downward pressure on home prices as sellers compete for existing demand.

Perhaps unsurprisingly, housing inventory and time spent on the market are increasing the most in Sun Belt metros that have experienced a boom in residential demand in recent years. Among the metros with the largest annual rise in listing counts during November, Miami homes are experiencing the most prolonged on-market duration, averaging 74 days. Miami is followed closely by its fellow Florida metros of Orlando (73) and Jacksonville (72). Denver (59) and Sacramento (51) are the only non-Sun Belt metros to crack the top 15.

These data suggest that the metros that saw some of the most intense post-pandemic home price inflation from net domestic migration are experiencing the most significant upticks in supply. As more homes become available for purchase, pent-up homebuying demand will likely shift a segment of existing apartment tenants away from rentals. Consequently, rents should see stabilization in these high-supply markets, alleviating some affordability challenges for renters who have struggled to keep up with rising costs, all else equal.

The outlook for sellers is not all doom, however. As Paul Centopani of The Mortgage Report points out, the share of for-sale homes nationally that reduced their listing prices fell from 18.6% of listings in October to 16.7% in November and is below the 18% registered one year ago.

Buyer versus seller leverage in the housing market will continue to be a tale of local variations in 2025. A sizeable shift in the home financing landscape via falling interest rates is certainly capable of upending current housing market dynamics. However, all else equal, the balance between housing market supply and demand is beginning to shift in favor of the consumer.