- Existing home sales projected to climb 7.5% to 4.3 million in 2025
- Housing inventory surges 28% compared to spring 2023 levels
- Builders offer rate buydowns and design credits to attract buyers
- Southern markets like Texas see 22% spike in negotiable listings
The US housing market shows tentative signs of thawing after two years of stagnation, with mortgage rates stabilizing near 7% and inventory levels reaching their highest point since 2021. While affordability remains challenging, eXp Realty CEO Leo Pareja notes a critical shift: For the first time since the pandemic frenzy, buyers have measurable negotiating power in three-quarters of metro areas.This delicate balance between persistent rate pressures and improving supply creates what analysts call a transitional marketpoised for gradual recovery.
Pareja's three-legged stool theory explains current dynamics: inventory availability has improved significantly, financing options remain constrained, and affordability stays out of reach for 43% of first-time buyers. However, strategic buyers now find opportunities in markets where listings have doubled year-over-year. Austin and Tampa lead this trend, with average days on market increasing from 11 to 26 days since 2022.
New construction plays a pivotal role in the inventory surge, with builders completing 18% more homes than last year. Major developers like DR Horton now offer creative incentives including 2-1 rate buydowns, $10,000 design center credits, and 90-day rate locks. These concessions effectively lower purchase prices by 4-6% without spooking appraisers,explains Pareja. It's a win-win that maintains neighborhood valuations while improving accessibility.
The mortgage rate outlook remains the market's wild card. Most economists predict rates will hover between 6.5-7% through 2025, creating what Pareja calls the new normal.This stability has unexpected benefits: 68% of recent buyers report feeling confident about long-term affordability, compared to just 29% during 2022's rate volatility. Financial planners advise clients to focus on payment-to-income ratios rather than chasing historic lows.
Regional disparities create pockets of opportunity. In Houston's suburban markets, inventory has tripled since 2023, enabling buyers to secure 3% price reductions on average. Florida's new construction boom brings 15,000 additional units to market monthly, with builders absorbing closing costs in 62% of transactions. These localized gluts contrast with ongoing shortages in Midwest markets like Columbus and Indianapolis, where competition remains fierce.
First-time buyers face unique challenges but benefit from evolving strategies. Pareja recommends exploring lease-to-own agreements in high-inventory markets and prioritizing properties needing cosmetic updates. The era of move-in ready premiums is over,he observes. Savvy buyers save 12-15% by accepting dated kitchens in exchange of structural soundness.
Industry analysts identify three emerging trends: 1) Equity-rich sellers offering 2% closing cost assistance in 39% of transactions, 2) Hybrid work models enabling longer commutes for affordable housing, and 3) Municipalities fast-tracking ADU permits to increase density. These factors suggest a market transitioning from panic buying to calculated purchasing.
While 2025 won't return to the boom years, the gradual inventory rebuild and rate stability create sustainable growth. As Pareja concludes: We're entering the healthiest balance of buyer/seller power since 2014. Patience and preparation now yield measurable rewards.
