10 Signs the Housing Market Is About to Shift Again

After years of volatility, the housing market is showing new signs of change. Buyers and sellers are watching closely to see what comes next, and small shifts in data can signal big moves ahead. Here are ten indicators that suggest the market may be turning again in 2025.

Mortgage Rates Start to Stabilize

Mortgage rates surged in recent years, cooling demand across the country. Now, signs of stability could bring buyers back as affordability improves. Even a small dip in rates can spark activity since a half-point shift changes monthly payments. Early signs suggest the market may be starting to turn.

Inventory Levels Begin to Rise

One of the biggest signs of change is when more homes start hitting the market. Low inventory has kept prices high, but new listings give buyers more leverage and help cool bidding wars. As supply improves, sellers often adjust expectations, and price cuts become more common. Rising inventory usually shows up before bigger price shifts make the news.

Price Growth Slows or Reverses

For years, home prices only went one direction…up. Now, in many areas, growth has slowed or even turned negative. Flat or declining prices suggest demand is cooling, giving buyers more negotiating power. Sellers may need to cut asking prices to attract offers. Redfin reports that in early 2025, price growth slowed significantly compared to last year.

Homes Stay on the Market Longer

Days-on-market is another early indicator of change. When homes sell quickly, it signals strong demand. But when listings linger, it shows buyers are being more cautious. Longer selling times often lead to price reductions. Many agents are reporting that homes aren’t moving as fast as they did just a year ago.

Sellers Begin Offering Incentives

In a hot market, sellers rarely throw in extras. But when things cool, incentives like covering closing costs or offering mortgage rate buydowns become common. These perks signal that sellers are competing harder for fewer buyers. It’s a telltale sign that the balance is shifting. Incentives often appear before major price cuts.

Builder Confidence Drops

Homebuilders are a good barometer of future conditions. When they cut back on new construction, it suggests concern about demand. Fewer housing starts mean less confidence in sales ahead. This often happens just before broader market slowdowns. According to the National Association of Home Builders, builder confidence has softened in 2025.

Rental Markets Show Pressure

Rental data often hints at housing shifts. When rent growth slows or vacancy rates rise, it suggests less demand for housing overall. This can spill over into the ownership market, forcing sellers to lower expectations. Watching rental trends gives an early read on affordability pressures. Analysts see these patterns emerging in several large cities.

Foreclosures and Distressed Sales Rise

An uptick in foreclosure activity points to growing financial stress. When more homeowners struggle with payments, supply increases and puts downward pressure on prices. Even a modest rise in distressed sales can shake buyer confidence. It’s a metric housing experts monitor closely. ATTOM Data shows foreclosure filings increased in late 2024, hinting at potential softening.

Regional Markets Diverge

Not all housing markets move together. While some cities stay hot, others show early declines. Regional differences often mark the beginning of a national trend. Buyers and sellers should watch for signs that stronger markets are starting to follow weaker ones. Shifts in specific regions often ripple outward.

Buyers Regain Negotiating Power

Perhaps the clearest sign of change is when buyers can negotiate again. Lower prices, longer timelines, and more seller concessions give them leverage. This marks a major shift from recent years, when sellers held all the cards. The balance of power changing hands is one of the strongest indicators that the market has turned. Negotiating power usually shifts before headlines catch up.

What to Try Instead

For buyers, a shifting market could finally open the door to better deals—patience and careful timing matter. For sellers, pricing realistically and offering small incentives can keep properties moving. Both sides benefit by staying informed and watching local data closely. The key is recognizing early signs so you can act before the crowd.

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