Do You Think the Housing Market’s About To Crash? Read This First

[Desiree Rejeili]

Lately, it feels like a lot of people have been asking the same question: “Is the housing market about to crash?”

If you’ve been scrolling through social media or watching the news, you might have seen some pretty scary headlines yourself. That’s why it’s no surprise that, according to data from Clever Real Estate, 70% of Americans are worried about a housing crash in 2025.

But before you hit pause on your plans to buy or sell a home, take a deep breath. The truth is: the housing market isn’t about to crash – it’s just shifting. And that shift actually works in your favor.

Today’s Inventory Keeps the Housing Market from Crashing

Mark Fleming, Chief Economist at First American, says:

Think about it. If there’s a shortage of something – like tickets to a popular concert – prices go up. That’s what’s been happening with homes. We still have a shortage of supply. Too many buyers and not enough homes push prices higher.

Check out the white line for 2025 in the graph below. Even though the number of homes for sale is climbing, data from Realtor.com shows we’re still well below normal levels (shown in gray):

That ongoing low supply is what’s stopping home prices from dropping at the national level. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says: More Homes for Sale Means Price Growth Is Easing

And, as more homes become available, that takes some of the intense upward pressure off home price growth – leading to healthier price appreciation.

So, while prices aren’t falling nationally, growing inventory means they also aren’t rising as fast as they were. What we’re seeing is (see graph below):

And according to Freddie Mac, that moderation should continue through the rest of this year:

Put simply, that means prices will continue going up in most areas, just not as quickly. That’s good news for anyone who’s been having trouble finding a home and feeling sticker shock from the rapid price appreciation of the past few years.

But of course, what’s happening with prices and inventory is going to vary by local market. So, talk to your agent to find out what’s happening where you live.

Bottom Line

Don’t let the talk scare you. Experts agree that a housing market crash is unlikely in 2025. As Business Insider reports:

Instead, we’re heading into a housing market that’s healthier and more balanced, with slower price growth and more opportunity.

Chat with a local real estate agent about what’s happening in your local market and how you can make the most of it.

[Chris Seveney]

Quote from @Grant Tyler Short:

The inventory interpretation is an interesting one. I do continue to see folks look at a static market inventory number and make a claim about that static number at X point in time. 

In AZ, for the past 24 months, many realtors have continued to state inventory is at an all time low. Month after month after month, completely ignoring the massive, increasing, rate of change of new inventory growth as a result of both 1) new listing growth month over month and 2) decreases in purchase demand. It's analogous to a train accelerating from a dead stop that is increasing in acceleration but an outside observer  stating that at X point in time the speed is still "slow." I would caution, don't ignore the acceleration variable. It paints a more holistic picture. In AZ, inventory has 6Xd since the nadir of pandemic buying frenzy. Grant Cardone may be pleased once inventory 10Xs I suppose!

I think inventory also needs to look at why is the inventory increasing - the number of defaults especially on the FHA side is increasing and I agree that I do not see a crash in 2025 - but when institutional lenders/investors are pulling out of states like FL, AZ and other places this should raise some red flags as they spend 7-8 figures a year researching data and have more data than we have. So I would say proceed with caution, there are still deals out there and money to be made - but the days of buying an asset and expecting 5-10% appreciation per year are most likely not going to happen for a few years.