Amid growing economic uncertainty surrounding the Trump administration’s tariffs, some real estate analysts now think U.S. home prices will fall by the end of the year instead of rising as previously thought.
A new report by Redfin estimates that the median sale price of a typical U.S. home will fall flat in the third quarter of the year, while it will slide down by 1 percent in the fourth quarter.
Why It Matters
Home prices skyrocketed across the country during the COVID-19 pandemic, when relatively low mortgage rates and the rise of remote work spurred a surge in demand. While the pace of their growth has since slowed, home prices remain historically high and are still rising at the national level.
Since the beginning of the year, analysts started observing that the housing market seemed to be approaching a breaking point, with buyers being pushed to the sidelines by high prices and elevated mortgage rates while sellers finally decided to put their homes on the market.
Now, they think that the current economic climate might actually finally bring prices down—a welcome change for aspiring homebuyers.
What To Know
With the exception of a brief time of “correction” in early 2023, home prices have been rising year-over-year since 2012, according to Redfin data. The annual price decrease they now expect to report in the last quarter of 2025 would be, in a way, a seismic change for the housing market.
The reason for the 1 percent drop forecasted by Redfin is simple, researchers at the real estate brokerage said: There are now more sellers than buyers in the market. After years of chronic shortages, the supply of homes on the market is finally on the rise, with the total inventory rising 16.7 percent year-over-year in April to its highest level in five years. New listings were up 8.6 percent.
While there is still a sizable gap between supply and demand in the country, many aspiring homebuyers just cannot afford to purchase a property right now. As a result, demand is down, with sales of existing homes down by 1.1 percent year-over-year in April to a six-month low, according to Redfin.
The typical home that sold that month took 40 days to do so—five days longer than a year earlier.
“The U.S. housing market has been lackluster since mortgage rates rose sharply at the start of 2022, and has slowed further in the last several months due to widespread economic instability and stubbornly high housing costs,” the Redfin report reads.
“More homes for sale, combined with fewer people interested in buying them, is expected to push U.S. sale prices down.”
What People Are Saying
Corey Stambaugh, a Redfin Premier agent in North Carolina, in a press release: “A lot of the people selling right now bought in 2021 or 2022, when home prices were near their height. Even though we advise them to list at today’s market value, a lot of them decide to list high to recoup their money.
“But those sellers face reality once their home has been sitting for a couple weeks without any offers. At that point, they’re willing to seriously consider low offers and even throw in some concessions, because they’d rather sell today than face the uncertainty of tomorrow.”
Chen Zhao, Redfin’s head of economics research, in a press release: “For house hunters looking to buy soon, waiting until the end of the year for prices to fall slightly is unlikely to pay off. We know there’s room to negotiate right now, so that’s the best way to take advantage of the changing market. And the sooner you buy, the sooner you start to build equity.”
What Happens Next
In an expected buyers’ market, sellers will have to come to terms with the fact that their original asking price is likely too high and will be forced to offer discounts. According to Redfin, nearly half of today’s sellers are already offering concessions.
In the long term, they are likely to have to accept that their homes are just not worth as much as they were a few years ago.
