This spring’s homebuying season offers a more promising outlook for potential buyers than in recent years, assuming they have the financial capacity to make a purchase. Currently, housing prices are increasing more slowly. Although mortgage rates are still high, they have shown signs of easing and could decrease further if economic conditions deteriorate due to the Trump administration’s tariffs, which have created market turbulence and raised recession concerns. However, the most notable development is the significant rise in available homes compared to last year.
The supply of houses, though still below historical norms, has seen a 28.5% surge in active listings — encompassing all homes on the market except those under sale contracts — from the previous year, according to Realtor.com. Many major metropolitan areas, including San Diego, Las Vegas, Atlanta, and Washington D.C., have observed listing increases between 44% and 68%. As homes remain listed for longer periods, some markets are experiencing price reductions. Recently, the median listing price decreased compared to the prior year in most of the fifty largest metro areas, with Austin, Miami, and Kansas City noting declines exceeding 6%.
These patterns should provide homebuyers with greater negotiation power this season, though they may not offset the challenges faced by those who have been priced out of the market over years of rising prices. According to Joel Berner, a senior economist at Realtor.com, the market isn’t exactly in favor of buyers but is more balanced than in the past few years, which were largely seller-dominated. This changing landscape was evidenced by the experiences of Ryan and Whitney Vasko, who recently moved from Oregon to Colorado.
The Vaskos sold their house in Portland last December for $505,000, slightly below their asking price but above their target minimum. Meanwhile, they sought a new home in the Denver area, a region seeing one of the highest boosts in available homes. Active listings in March were up 67.3% compared to last year, and median listing prices fell by 5.6% to $585,000. By March’s end, they secured a four-bedroom, three-bathroom house in Littleton, Colorado, at $680,000, $5,000 above the list price, with sellers agreeing to lower their mortgage rate for the first two years.
The broader U.S. housing market has faced a downturn since 2022 due to rising mortgage rates from pandemic lows. Sales of pre-owned homes reached their lowest in almost three decades last year. While easing rates and increased availability slightly improved monthly sales this February, they remain lower compared to the same time last year. The average 30-year mortgage rate is currently 6.6%, down from over 7% in January but still higher than last September’s approximately 6% rate.
In addition to easing rates, homebuyers benefit from slightly lower prices. March saw median listing prices drop in 32 of the largest 50 metro areas, including Kansas City, San Francisco, Miami, and San Diego, maintaining a national median price of $424,900, according to Realtor.com. These shifts grant buyers more sway in negotiations, such as demanding home inspections or asking sellers to cover additional costs.
While multiple offers still occur, situations vary by location. For instance, Gilad Hoffman found a four-bedroom home early in his search and acquired it for $13,000 above the asking price, despite competing offers. Higher interest rates didn’t deter him, accepting a 7% rate with lender credits for closing costs, hoping to refinance eventually.
Yet, the market remains largely inaccessible for many, notably first-time buyers lacking equity for reinvestment. Despite slowing price growth, past five-year prices jumped 47%, overshadowing recent declines. The market still needs significantly more listings to truly balance. February saw 1.24 million unsold homes, up 17% year-on-year but well below the long-term monthly average of 2.21 million, per the National Association of Realtors.
As of January, a household earning the median income of $79,223 needed to allocate 47% of its earnings to afford a median-priced home, matching record-high affordability ratios since 2005. The Department of Housing and Urban Development deems any housing costs above 30% of income unaffordable. Should mortgage rates drop, which some economic forecasts suggest might stabilize at around 6.5%, potential buyers could find more purchasing power.
Recent global trade tensions have influenced the 10-year Treasury yield, used to price home loans, to drop to its lowest in months, hinting at potentially lower mortgage rates. While tariffs may boost inflation, providing upward pressure on these yields, ongoing trade conflicts could influence rates further. Nevertheless, even if mortgage rates decrease, such changes could be overshadowed by concerns over job security and inflation, says Lisa Sturtevant, chief economist at Bright MLS.