Some Highlights

• If you put your home search on hold because you couldn’t find anything you liked in your budget, it’s time to try again. ​
• There’s a much wider selection of homes for sale, with more fresh listings hitting the market each month.
• With more options come more possibilities. Connect with an agent if you want to see what’s available in your area.​

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:

“There’s just generally not enough supply. There are more people than housing inventory. It’s Econ 101.”

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:

“… if there’s a shortage, prices simply cannot crash.”

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 price moderation (see graph below):

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

“In 2025, we expect the pace of house price appreciation to moderate from the levels seen in 2024, while still maintaining a positive trajectory.”

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:

“. . . economists who study housing market conditions generally do not expect a crash in 2025 or beyond unless the economic outlook changes.”

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.

Headlines are talking about the inventory of new homes and how we’re back at the levels not seen since 2009. And maybe you’re reading that and thinking: oh no, here we go again. That’s because you remember the housing crash of the late 2000s and you’re worried we’re repeating the same mistakes.

But before you let fear take hold, remember: headlines are designed to be clickbait. And a lot of the time, they do more to terrify than clarify. That’s because they don’t always give you all the context you need. So, let’s take a step back and look at what the data really says.

Why This Isn’t Like 2008

While it’s true the number of new homes on the market has reached its highest level since 2009, that’s not a cause for alarm.

Here’s the context that matters most. When the data is turned into a graph, it’s clear the amount seen in 2009 wasn’t the peak of oversupply – not even close. That high point came earlier in 2007-2008. If anything, 2009 was when the number of new homes being built was really starting to slide back down (see graph below):

The overbuilding that contributed to the housing crash happened in the years leading up to 2008. Not in 2009. At that point, construction was already slowing down. So, saying we’ve hit 2009 levels isn’t the same thing as saying we’re overbuilding like we did the last time.

Builders Have Actually Underbuilt for Over a Decade

Here’s some more data to prove it to you. After the crash, builders pulled production way back. As a result, they built far fewer homes than the market needed. And that was a consistent problem that lasted for over a decade. That long stretch of underbuilding created a major housing shortage, which is still a challenge today.

The graph below uses Census data to show the number of new homes built each year over the past 52 years. You can clearly see the overbuilding leading up to the crash (in red), the period of underbuilding that followed (in orange), and how we’re only now getting back to a more normal level of construction:

Today’s situation is different. Builders aren’t overbuilding – they’re catching up.

In a recent article, Odeta Kushi, Deputy Chief Economist at First American, highlights this deficit and speaks to why the recent ramp-up in construction is actually good for today’s market, especially buyers:

“This means more homes on the market and more options for home buyers, which is good news for a housing market that has been underbuilt for over a decade.”

Of course, like anything else in real estate, the level of supply and demand will vary by market. Some markets may have more newly built homes, some less. But, nationally, there’s nothing to worry about. This isn’t like the last time.

Bottom Line

No matter what you’re reading or seeing, the growing number of newly built homes on the market isn’t a red flag nationally – it’s a sign builders are starting to make up for years of underbuilding. If you want to talk about what’s happening in your market, connect with an agent.