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

Recently, many 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 come across some alarming headlines. This could explain why, according to data from Clever Real Estate,   70% of Americans are worried about a housing crash in 2025.

However, before you decide to pause your plans to buy or sell a home, take a moment to relax. The reality is that the housing market is not on the verge of crashing; it is simply shifting. In fact, this shift can actually work 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.”

Consider this: when there is a shortage of something, such as tickets to a popular concert, prices tend to rise. The same principle applies to homes. We are currently facing a shortage in housing supply. There are too many buyers and not enough homes, which drives prices higher.

Refer to the white line for 2025 in the graph below. Although the number of homes for sale is increasing,data from Realtor.com shows we’re still well below normal levels (shown in gray):

Ongoing low supply is preventing home prices from decreasing nationally. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), states this clearly.:

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

More Homes for Sale Means Price Growth Is Easing

As more homes become available, the intense upward pressure on home prices eases, resulting in healthier price appreciation. While home prices are not decreasing nationally, the increase in inventory means that they are not rising as quickly as they once were.

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.”

In simple terms, this means that prices will keep rising in most areas, but at a slower pace. This is good news for those who have struggled to find a home and have felt overwhelmed by the rapid price increases in recent years.

However, it's important to note that price trends and inventory levels can differ significantly depending on the local market. Therefore, it's best to consult your real estate agent to understand the situation in your specific area.

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.