U.S. Housing Report: Zillow, Redfin, and Realtor.com Reveal a Market in Transition

Home price trends indicate a slowing pace of appreciation as the housing market adjusts to evolving conditions. Zillow forecasts a modest 0.9% increase in home values for 2025, a significant slowdown from the previous 2.9% growth projection, largely due to expectations of rising inventory and tempered demand. Similarly, Redfin reports that by late February, the U.S. median home sale price had risen 3.5% year-over-year, marking the smallest gain since September. Realtor.com data further highlights a slight 0.8% decline in the median list price compared to last year, bringing the median to $412,000 in February. However, the price per square foot has edged up by 1.2%, suggesting that home values are still seeing incremental gains despite overall price adjustments. Additionally, more sellers are being forced to make concessions in a cooling market, with 16.8% of listings seeing price reductions in February—the highest percentage for this month since 2016. These trends indicate a shift toward a more balanced market, where buyers have slightly more leverage as sellers respond to softened demand.

Faced with this plateau in prices, sellers need to recalibrate. “Factors that should be considered before listing are price, condition of the home, [and] location,” said Michael LaMorte, Associate Broker from Christie’s International Real Estate Group. Well-priced, prime condition homes in favored areas are still selling, but overpriced ones are increasingly languishing until sellers reduce the ask. In short, strategic pricing has become more important than ever for a successful sale.

The consensus is that the market is transitioning away from the rapid price appreciation of the pandemic era, with some areas even seeing slight declines or needed discounts to attract buyers. Overall, while home values aren’t crashing, sellers can no longer expect the sharp increases of prior years, and buyers are gaining a bit more negotiating power on price.

Inventory levels are rising across the U.S., contributing to cooling home prices. Zillow reports stronger-than-expected new listings in early 2025, which has led to an upward revision in inventory projections. This increase in inventory is giving buyers more choices, easing the severe supply shortage seen last year.

Redfin shows a significant rise in homes for sale, with 3.7 months of supply in January, the highest since 2019. By late February, supply increased to 4.6 months, compared to 4.0 months in the previous year. Homes are staying on the market longer, with the typical home lingering for around 56 days in January. This shift toward more inventory and cooled demand is giving buyers more negotiating power, with more price reductions and homes selling below asking.

Realtor.com reports a 27.5% increase in active listings in February compared to last year, marking the 16th consecutive month of inventory growth. Despite still being below pre-pandemic levels in some regions, the increased supply is offering buyers more options than in 2024.

With more homes available, buyers have more choice and less urgency, creating tougher competition for sellers. “While buyer traffic may be lower during winter, the buyers that are actively looking tend to be more motivated and more serious,” emphasizes Elegran/Forbes Global Properties Real Estate Broker Kevin Huang. In this climate, he notes, “ If your property is well-prepared and competitively priced, you can still secure a favorable outcome despite the season.” Huang’s advice underscores that an ample inventory shifts leverage: unlike the bidding wars of 2021–2022, many buyers now feel comfortable taking their time, comparing properties and negotiating – a reality sellers need to account for. “Ensure your pricing aligns with current market conditions,” said Huang.

The overall trend is clear: inventory is up, and competition for sellers is growing. With more homes available, buyers have less urgency, allowing them to shop around and negotiate more effectively. As inventory continues to rise, market dynamics are shifting toward a buyer-favored market, easing the pressure on prices and giving buyers more leverage than in the pandemic-era housing boom.

​​Zillow forecasts existing home sales in 2025 to remain subdued, projecting 4.11 million sales, essentially flat from 2024. This level is well below pre-pandemic norms. Sales are expected to follow the same slow pace as in 2023–24, with a typical seasonal uptick in spring but no dramatic change.

Redfin’s data shows sluggish sales, with January pending home sales down 6.3% and cancellations at the highest level for January since 2017. However, by late February, their Homebuyer Demand Index jumped to its highest since the start of the year, suggesting increased buyer interest as mortgage rates dip and inventory grows.

Realtor.com’s metrics indicate slower sales, with homes taking longer to sell. In February, the median days on market increased to 66 days, five days longer than the previous year. Sellers are adjusting expectations, with more price cuts and longer waiting times.

All sources agree on subdued sales activity in early 2025. While buyer demand shows signs of improvement, the market remains constrained by affordability challenges and elevated mortgage rates, with any sales recovery expected to be gradual and seasonal.

Zillow emphasizes that high mortgage rates remain a significant drag on the market. While rates may decrease slightly by late 2025, Zillow forecasts minimal relief, predicting affordability constraints will continue to limit buyer demand. Many potential buyers are being sidelined by high rates, with many opting to rent longer. Zillow expects this trend to persist throughout 2025, with single-family rents projected to rise 3.7% due to strong rental demand.

Redfin reports a dual effect of mortgage rates: while historically high rates are reducing affordability, recent declines have provided some relief. Mortgage rates fell from 7.1% to 6.8% in February, giving buyers slightly more purchasing power and sparking increased buyer interest. However, Redfin cautions that rates around 6-7% are still elevated by historical standards, meaning any market improvement is tied to interest rate movements. If rates spike again, demand could cool.

Realtor.com also highlights the impact of high mortgage rates, noting that many buyers are holding back due to financing costs. However, it suggests that if home prices stabilize or decrease slightly, more buyers may enter the market. While the report does not predict a significant rate change, it acknowledges that lower prices could offset the effects of high rates and reignite buyer interest.

All sources agree that elevated mortgage rates are suppressing buyer activity, contributing to a cooler housing market in 2025. Zillow expects continued high rates to dampen sales and price growth, while Redfin observes that even small rate declines can boost buyer interest. Realtor.com notes that price adjustments could draw more buyers despite high rates. Therefore, the data suggests that mortgage rates will remain a key factor in market conditions throughout 2025, with potential rate declines offering a chance for recovery. But price adjustments may also play a critical role in reigniting demand.

The February housing reports from Zillow, Redfin, and Realtor.com depict a cooler, more balanced market compared to the frenzied seller’s market of the past few years. Home price appreciation has stalled, showing slight gains or declines, indicating the market has hit an affordability ceiling. Inventory is growing, and homes are spending more time on the market, giving buyers more choices and leverage. As competition eases, bidding wars are fewer, price cuts are common, and buyers can often negotiate price and terms. This shift signals a healthier balance between supply and demand, with conditions now favoring buyers in aggregate, or at least creating a stalemate between buyer and seller power.

Despite this general trend, there are subtle differences in emphasis. Zillow is cautious, predicting a flat market in 2025 with any improvements hinging on mortgage rates. Redfin suggests we may already be seeing a shift toward a buyer’s market, based on metrics like months of supply and sale-to-list discounts, but warns that these conditions may not last if sidelined buyers return. Realtor.com confirms the market is cooling but notes that price per square foot is still rising modestly and that regional variations exist. It also hints that pent-up demand could resurface, but Zillow doesn’t expect much rebound without rate relief. These differing viewpoints highlight uncertainty about the market’s next phase.

Buyers in early 2025 find themselves in the best position since the late 2010s. Inventory is up, and prices aren’t soaring, allowing buyers more time to shop around and even negotiate. However, affordability remains a challenge with high mortgage rates. The reports suggest that in certain regions, particularly parts of the South and West, buyers may have an upper hand, while in the Northeast, competition can still be stiff. The outlook suggests less risk of short-term equity loss, but buyers should remain patient. A drop in rates could trigger a surge of delayed buyers, closing this window of opportunity by late 2025.

Sellers face a more challenging landscape and must adjust their strategies. The days of overpricing and multiple offers are gone in most areas. Realistic pricing is crucial, as overpricing often leads to longer listing times and price cuts. Sellers must be prepared to negotiate and adapt to a slower market.

From a seller’s standpoint, this means recalibrating tactics. “Your home may command a premium, but it is important to price it competitively to attract serious buyers,” says Keller Williams New York City Real Estate Salesperson Yan Gladkov. In practical terms, sellers might need to accommodate contract contingencies and understand that sales may take longer in this environment. Gladkov’s insight reinforces the comparative data: with buyers gaining ground, successful sellers are those who adapt – by making their homes and their terms attractive in a less frenetic market.

The 2025 housing market is entering a new phase of equilibrium. The pandemic-era boom has cooled, but the market is stabilizing rather than collapsing. Buyers and sellers are adjusting to 6-7% mortgage rates, with affordability being a key concern. If rates drop or incomes rise, demand could surge and reignite price growth. However, if rates remain high or economic conditions worsen, prices may decline in some markets. Overall, the national market is sluggish but stable, with supply and demand finding a healthier balance.

The broader market is in a reset. The rapid gains of 2021-2022 are gone, but a crash is unlikely due to an ongoing housing shortage and solid lending standards. Local economic forces and migration patterns will drive outcomes more than ever. While increased inventory and softening prices are easing affordability, high financing costs remain a hurdle.

Sellers can still succeed with a strategic approach. Experts Michael LaMorte, Kevin Huang, and Yan Gladkov emphasize the importance of competitive pricing, presentation, and flexibility. Overpricing will deter buyers, but well-positioned homes can generate strong interest. Sellers should invest in repairs and staging, and be prepared to negotiate and adjust timelines. By focusing on these fundamentals, sellers can navigate the changing market and secure favorable deals.

In our next article, HAVEN will take a further look at the numbers: how the current U.S. housing market is reacting to prevailing economic factors influencing real estate.