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U.S. Home Prices Shift from Rapid Growth to Gradual Cooling

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  //house-home.news-articles.net/content/2025/11/2 .. -shift-from-rapid-growth-to-gradual-cooling.html
  Published in House and Home on Thursday, November 20th 2025 at 16:38 GMT by HousingWire

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Cooling Home Prices, Steady Inventory and a Re‑empowered Buyer: A Deep Dive into the Current U.S. Housing Landscape

The housing market, which has long been a barometer of economic health, is experiencing a notable shift. According to a recent article from HousingWire, the pace of home price growth is slowing, inventory levels are holding firm, and buyers—once on the periphery of the market—are beginning to regain leverage. The piece weaves together data from industry reports, government statistics, and expert commentary to paint a picture of a market that is cooling but not collapsing, and one that may soon become more favorable for those looking to purchase.

1. Price Trends: From Rapid Growth to Gradual Cooling

For the past decade, U.S. home prices have been on an almost relentless upward trajectory. The S&P/Case-Shiller Home Price Index recorded gains of 15% in 2021 and 12% in 2022, fueled by low mortgage rates, pent‑up demand, and an influx of foreign capital into the U.S. market. However, the article notes a clear inflection point in 2023, when the rate of price appreciation began to decelerate.

The HousingWire article cites data from Zillow’s Home Value Index (ZHVI), which shows that the national median price rose by only 3.8% over the year to Q1 2024, a sharp contrast to the 10% increase seen in 2022. In many core markets—such as Seattle, Austin, and Phoenix—the price growth rate has dipped below 2%, a sign that the earlier boom is giving way to a more balanced environment. While a “cooling” headline can be misinterpreted as a decline, the reality is that prices are simply leveling off, providing buyers with a reprieve from the relentless upward spiral they experienced in the last two years.

The article also highlights a key nuance: price growth remains uneven across the country. High‑income metro areas, which historically see the steepest appreciation, still see modest gains (often 4–6%). In contrast, many secondary markets are experiencing even slower growth or slight declines, especially in regions hit by supply chain disruptions and inflationary pressure on construction costs.

2. Inventory: A New Breed of “Stable” Market

Inventory is the lifeblood of the housing market, and the HousingWire piece discusses how the market’s inventory levels have become “stable” rather than “scarce.” The National Association of Realtors (NAR) reports that the months‑of‑inventory metric—how many months it would take to sell the current inventory at the prevailing sales pace—has risen from an all‑time low of 1.2 months in early 2021 to 2.5 months in early 2024. While still below the 4‑month threshold that typically signals a balanced market, this increase marks a significant departure from the extreme shortage of housing that dominated the pandemic era.

One key driver of this trend is the slowdown in new construction. Building costs have surged, and labor shortages have pushed developers to reduce the pace of new housing, particularly in the single‑family segment. The article notes that the U.S. Census Bureau’s Building Permits data shows a 12% decline in new residential permits for the first quarter of 2024 compared to the same period in 2023. Consequently, the supply side is more in line with the demand side, providing buyers with a better chance to negotiate favorable terms.

The article also highlights that the “stable” inventory is not just a matter of quantity but also of quality. The average days on market have risen from 20 days in 2021 to 28 days in 2024, indicating that homes are taking longer to sell and that sellers are having to be more flexible on price and contingencies.

3. Buyer Leverage: The Market’s Shifting Power Balance

Perhaps the most exciting development, according to the HousingWire article, is the shift in leverage from sellers to buyers. In the peak of the housing boom, buyers were competing in a “bidding war” environment, where offers often exceeded list prices by 10% or more. Now, the article reports that buyers are finding a new foothold.

Mortgage rates are a primary catalyst. The Federal Reserve’s recent hikes in the federal funds rate have pushed the average 30‑year fixed‑rate mortgage from 2.5% in 2022 to 7.5% in 2024. The article points out that higher rates reduce the affordability range for many buyers, but they also temper sellers’ willingness to keep list prices artificially high. As a result, sellers are more open to negotiating on price, repairs, or closing costs. The article cites a Mortgage Bankers Association survey that found 55% of buyers now negotiate closing costs, and 20% now negotiate repairs.

In addition to rates, the article underscores a rise in buyer activity in “first‑time homebuyer” and “investor” segments. With many investors pausing due to tighter capital and higher financing costs, first‑time buyers are capturing a larger share of the market. A Zillow survey mentioned in the article indicates that 32% of first‑time buyers reported that they felt the market was more “reasonable” than in previous years, largely due to more manageable price appreciation and a slower supply build‑up.

4. Regional Variations and Market Dynamics

The article does a commendable job of breaking down these national trends into regional contexts. In the West, for instance, the high cost of living and low inventory have kept prices high, but the article notes that the California market is cooling faster than most, partly due to a recent rise in the state’s mortgage rates and stricter zoning regulations. In the Midwest, inventory levels have remained higher than in the South, which the article attributes to a more robust construction pipeline and a relatively lower cost of living.

A highlight of the piece is its exploration of the “new normal” for sellers. In many markets, sellers are adjusting to a market that no longer rewards high list prices. They are adopting strategies such as pre‑inspection, offering a home warranty, or including closing cost credits to stay competitive. Sellers who have been on the market for more than 90 days are now re‑listing at a slightly lower price—sometimes as much as 2%—to entice buyers who are increasingly savvy and price‑conscious.

5. Looking Ahead: Forecasts and Uncertainties

The article closes by looking forward, noting that while the market is cooling, uncertainties remain. Key variables that could sway the market include:

• Interest Rate Trajectory: If the Fed continues to raise rates, affordability will decline further, potentially curbing demand.
• Inflation: Persistent inflation could keep construction costs high, stalling new inventory.
• Supply Chain: Ongoing disruptions in lumber and steel could keep supply tight in certain segments.
• Economic Growth: A slowdown in GDP growth could reduce consumer confidence and dampen buying activity.

Industry forecasters like CoreLogic predict a continued price plateau through the remainder of 2024, with a modest rebound in 2025 if rates stabilize. Meanwhile, the National Association of Home Builders is calling for more streamlined permitting processes to accelerate new construction.

6. Conclusion: A Market That’s Evolving, Not Collapsing

In summary, the HousingWire article provides a thorough, data‑driven snapshot of a housing market that is shifting from a sellers’ market to a more balanced one. Home price growth is decelerating, inventory levels are stabilizing, and buyers are regaining leverage, thanks in part to higher mortgage rates and a more disciplined construction pipeline. While regional variations and macroeconomic uncertainties add complexity, the overarching narrative is one of a cooling market that still offers significant opportunities for well‑positioned buyers.

For those on the fence about entering the market—or for those who think the “bubble” has already burst—this article underscores that the current reality is far from a market crash. Instead, it signals a phase of equilibrium where buyers can exercise more strategic negotiation, sellers can align expectations with market realities, and both parties can find common ground. As the article cautions, staying informed, working with trusted advisors, and monitoring key metrics such as price trends, inventory levels, and mortgage rates will be essential for navigating the evolving landscape.