High Rates, Tight Supply: Housing’s 2025 Balancing Act

The US housing market faces a delicate balancing act in 2025, influenced by lingering effects of the pandemic and persistently high mortgage rates. The current landscape reveals a market of contrasts: regions experiencing booming inventory due to post-pandemic migration, while others contend with persistent shortages, all amid price growth that continues to challenge affordability.

Given the slowdown in home sales, inventory levels have risen on a year-over-year (YoY) basis in most cities, with the national average showing a 19.3% YoY increase. However, inventory remains 19.7% below 2019 levels, indicating a long-term shortage compared to pre-pandemic norms. This persistent inventory gap highlights the broader challenges of housing supply in a post-pandemic world.

Nationally, home prices grew 2.5% YoY but have surged 46.6% since 2019. Notably, the metros that have seen little inventory growth since 2019, such as New York, Boston, and Chicago, have had the highest home price appreciation on a YoY basis. Conversely, cities such as Austin, Denver, Tampa, and San Antonio exhibited signs of price stabilization or modest declines amid higher post-pandemic inventory increases.

Home Price and Inventory Trends Since Covid