Many people are wondering if a major drop in home prices is on the horizon. In fact, some are hoping for a price dip to make buying a home more affordable. However, housing market experts agree: a crash isn’t in the forecast. Here’s why.
The key factor driving home prices higher is the imbalance between supply and demand. There are far more buyers than there are homes for sale, which creates upward pressure on prices.
Let’s break this down and explore why, on a national level, home prices are expected to remain steady or continue climbing.
Understanding the Supply and Demand Factor
Like any market, the housing market operates on supply and demand. When demand outpaces supply, prices rise.
The U.S. is currently facing a housing shortage of several million homes. This means there simply aren’t enough properties available to meet buyer demand. David Childers, President of Keeping Current Matters, explains:
“The main driving force on pricing is the limited amount of inventory in most markets across the country. That issue is not going to be solved overnight or in the next twelve months.”
How Did We Get Here
For more than 15 years, homebuilders haven’t been able to keep up with demand. After the 2008 housing crisis, new construction slowed significantly. Although building has picked up in recent years, it’s still playing catch-up. According to AmericanProgress.org, builders aren’t meeting today’s demand, let alone recovering from years of underbuilding.
Until the housing supply grows substantially, home prices are likely to remain stable or increase in most markets.
What’s Ahead for 2025?
Most industry experts predict that home prices will continue to rise next year, but at a slower, healthier pace compared to recent years. It’s important to note, though, that price trends can vary by region.
In areas with more available inventory, prices might grow at a slower rate or even dip slightly. However, in regions where inventory remains tight, prices will likely keep climbing. This is why working with a local real estate expert is crucial—they can provide insight into what’s happening in your specific market.
Wondering what it will take for home prices to decline? It all comes down to supply and demand. With housing inventory still limited in most areas, prices are expected to remain steady or rise.
If you’re curious about what’s happening in our local market, let’s connect. Understanding current trends can help you create a plan that fits your goals. Don’t navigate the housing market alone—reach out today for expert guidance!
