More than a decade of near-continuous home price appreciation may end this year.
Amid growing signs of a weak spring for home sales — sellers are listing but buyers aren’t buying — more housing economists are expecting a slight dip in average home prices this year. Redfin now expects median home prices to finish 2025 about 1% lower than 2024, while Zillow is calling for a 1.4% decline.
“Inventory is definitely contributing,” said Daryl Fairweather, Refin’s chief economist. “It’s also just this disconnect between where sellers’ expectations are and what buyers are willing to pay. Homes are falling out of contract more. All of that is an early indication that prices are going to weaken.”
If the predictions hold true, 2025 would be the first year home prices have fallen since 2023, when a sharp spike in mortgage rates drastically reduced affordability and priced many would-be buyers out of the market.
2023 was also something of a blip. Buyers returned when mortgage rates dropped from highs near 8%, and they quickly bid up prices again when faced with little supply. Median home prices continued to set new records last year and into 2025.
Now there are signs the market is shifting. The combination of sky-high prices and mortgage rates near 6.8% has kept many buyers sidelined even as inventory rises to levels not seen since mid-2020.
“The total number of homes for sale is up 20% from a year ago,” said Orphe Divounguy, a senior economist at Zillow. “It’s the best thing that could happen for buyers. It means buyers have more bargaining power, and they have more options to choose from.”
Even as the nationwide median home price looks poised to drop, the trend doesn’t hold in all markets. In the four weeks through May 18, median sales prices declined in 10 of the top 50 largest metropolitan areas in the country, according to Redfin data. And Fannie Mae’s Home Price Appreciation Index, which tracks single-family homes, calls for a 4.1% jump in prices this year, firmly positive but below last year’s 5.8% increase.
Cities where homebuilding has been robust in recent years, like Dallas, Houston, Austin, Texas, and Tampa, Fla., saw some of the largest price declines this May compared to a year earlier. Meanwhile, prices are still rising in parts of the Northeast and the Midwest.
Median sales prices were up 13.8% in the Philadelphia area through May 18, compared to a year earlier. Miami prices gained more than 10%, while the Detroit metro area saw a 9.5% jump.
Buyers are being picky for now. Existing home sales in April were the most sluggish for that month since 2009, during the depths of the financial crisis. Sales were down from a year earlier in all regions of the country except the Northeast, where they held flat.
