U.S. home sale prices reached a record high during the four weeks ending June 15, hitting a peak of $396,500, according to the latest Redfin data, up 1 percent from a year earlier.
It might be a discouraging figure for prospective homebuyers who have been struggling for years now with sky-high prices and historically elevated mortgage rates. But while home prices are still holding steady, experts do not expect them to continue rising for long, as new listings continue rising and inventory grows across the country.
Why Are Home Prices Still Climbing?
The main reason why home prices continue rising is that there is still a massive imbalance between supply and demand in the country, even if inventory has finally started rebounding over the past year. According to an estimate by the Washington-based think-tank Brookings, the U.S. housing market was short by nearly 5 million homes in 2024.
But while prices are still inching up, they are doing so at a much slower pace than they were over the previous five years, which saw double-digit year-over-year increases, or at the beginning of the year, when it was around 5 percent. In fact, we could say that they are now flatlining.
Buyers are also negotiating and obtaining significant discounts over sellers’ original asking price; according to Redfin data, the median sale price of a typical U.S. home is roughly $26,000 lower than the median asking price of $422,238.
This is happening because buyers are gaining the upper hand in a market where sellers outnumber them by roughly 500,000, according to a recent Redfin report. While many sellers have decided to stop waiting for mortgage rates to come down to sell their properties, many buyers are being kept on the sidelines by high prices and monthly payments, and are leaving those listings sitting idle on the market for increasingly long periods of time.
New listings of homes for sale were up 4.4 percent in the four weeks ending June 15 compared to a year earlier, while total listings were up 14.5 percent. Pending sales, during the same time frame, were down 1.5 percent year-over-year, and mortgage-purchase applications were down 3 percent week-over-week.
The result is that sellers, especially those who approached the market hoping to get as much as they would have for their home during the pandemic homebuying frenzy, are having to meet buyers where they are at, lowering their asking price.
“I’m explaining to sellers more and more that we need to be strategic in our pricing strategy because homes that are overpriced, even slightly, are likely to sit on the market and invite buyers to negotiate,” said Kelly Connally, a Redfin Premier agent in Tulsa, Oklahoma, in a press release.
“Pricing is most important, but with fewer buyers than usual out there, sellers should also make sure their home is in excellent condition and be ready to make repairs upon inspection,” Connally added. “There are a few exceptions: homes in desirable locations that are in perfect condition are still hot and typically sell at or above asking price.”
When Will Prices Finally Come Down?
Experts believe that, by the end of the year, home prices will finally start falling, even if modestly.
Redfin expects home prices to decline by 1 percent year-over-year by the end of 2025, with parts of the country that have experienced the biggest surges in inventory reporting even steeper price drops.
“The key for price changes will be to track growing inventory and time on market, especially relative to their pre-pandemic levels when the market was more balanced,” Realtor.com senior economist Jake Krimmel previously told Newsweek.
“Markets with high inventory and longer time on market are more likely to see price corrections. Overall, we expect a slow rebalancing rather than a sharp correction—unless economic conditions shift more dramatically.”
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