Will the real estate market experience a downturn? Find out what the industry professionals predict
The U.S. housing market, despite high mortgage rates, has shown resilience and steady growth. According to the S&P CoreLogic Case-Shiller home price index, home prices increased by 2.7% from June 2024 to June 2025. This growth, however, is expected to slow down in the near future.
Industry experts and housing economists do not anticipate a housing crash in the foreseeable future. Factors such as low overall inventory, restricted new construction, strong buyer demand, strict lending standards, and fewer foreclosures are maintaining the market's stability.
Active housing listings have risen over 33% year-over-year by mid-2025, providing more options and some downward pressure on prices. However, total inventory still remains below pre-pandemic levels in most places.
Sales are improving but have not yet reached historical norms. Economic uncertainty and high mortgage rates (around 6-7%) are keeping some buyers on the sidelines. As a result, national median sale prices remain near record highs, but price growth is expected to slow to about 2% annually in 2025 versus 4.5% in 2024.
Regional variation is a significant factor in the housing market. Some areas with relatively higher supply, such as parts of Florida, Hawaii, Montana, and cities like Austin and Phoenix, may see reduced prices or buyer advantages. Conversely, markets in the West and Northeast with tight supply are likely to see continued price gains.
Around 37% of new-home builders offered price cuts averaging 5% in June 2025, indicating some softness in that sector. Despite this, resale prices have held steady nationally.
As of July 23, 2025, the average mortgage interest rate on a 30-year loan was 6.76%. The housing market had a 4.7-month supply of housing inventory, an improvement from a year earlier but still below the five-to-six months needed for a healthy, balanced market.
Economists expect any market correction to be modest and not on the scale of the Great Recession. The median price of an existing home in June 2025 was $435,300, breaking the previous record set in June 2024.
Foreclosure activity is muted, with most homeowners having a comfortable equity cushion in their homes. Prices are rising in areas in the Northeast and Midwest, where building activity is muted.
Existing-home sales in June 2025 fell 2.7% to 3.93 million. Despite this, the nationwide median sale price in June 2025 represents 24 consecutive months of year-over-year increases.
In some markets like Austin, Texas, and Florida's Bradenton-Sarasota region, prices in formerly hot markets have been falling. However, these declines are expected to be moderate and localised rather than a widespread crash.
In conclusion, while a major nationwide drop in home prices is unlikely in the near term, the market is shifting from rapid price growth to a more balanced or mildly shifting landscape. Buyers may find some opportunities due to increased inventory and slower price hikes, especially in specific regional markets or new construction. Sellers should expect more negotiation and less frenetic demand than in recent years but not a collapse in values overall.
[1] National Association of Realtors [2] Realtor.com [3] Freddie Mac [4] Zillow
- In the context of personal finance and investing, experts predict that the housing market will maintain stability, making it a potentially attractive avenue for investment, given the low inventory, strong buyer demand, and modest price growth forecasted.
- While some regional markets might experience a slowdown or decrease in home prices, as seen in Austin, Texas, and the Bradenton-Sarasota region in Florida, these declines are expected to be moderate and localized, making it essential for buyers to carefully consider the housing-market landscape before making decisions in real-estate investments.
