Housing Market Faces Stagnation as Sellers Outpace Buyers in March 2025

In the latest report from Zillow, the home price growth came to a standstill in March 2025, coinciding with an increase in housing inventory during a month that is generally busy for real estate transactions. Surprisingly, this development occurred even as mortgage rates dropped to their lowest in the year.

Economic Conditions Impacting Buyers

The prevailing economic turmoil and affordability challenges have left potential buyers grappling with their options. Many first-time buyers, who typically lack significant equity to bolster their down payments, are facing heightened uncertainty about entering the housing market. Zillow's Chief Economist, Skylar Olsen, notes: “A turbulent economy weighs more heavily on first-time buyers than established sellers.” Despite lower mortgage rates, these buyers remain hesitant, leading to a stagnation in home transactions.

Inventory and Seller Activity

In March 2025, sellers made a notable return to the market, listing over 375,000 homes, marking a nearly 9% increase from the same period last year. This uptick in inventory allowed new shoppers to have 19% more options compared to the previous year. While active listing rates remain about 19% below a typical March pre-pandemic, the month-over-month increase aligns closely with seasonal patterns.

Unlike the sellers, buyer activity failed to keep up with the surge in listings. The number of homes that went into pending sales essentially remained flat, with approximately 265,000 listings transitioning to pending, a significant drop from new offerings. As a result, the total inventory of available homes rose to 1.15 million, with March 2025 marking the highest inventory available since 2020.

Slowing Home Price Growth

As inventory levels climb, competition among buyers cooled down significantly. The typical home value showed only a modest increase of 0.2% month-over-month in March, making it the slowest growth for this time frame since 2018. Nationally, home values appreciated just 1.2% over the past year. While some major metropolitan areas experienced declines, others saw slight gains, reflecting varying local market dynamics. The affordability of housing remains a pressing concern, with a typical mortgage payment accounting for about 35.3% of median household income nationwide, which is considered burdensome.

To bridge the gap between sellers and buyers, a record 23.5% of listings on Zillow saw price cuts in March—this is the highest percentage of price reductions recorded for March since 2018. For many sellers, adjusting prices was critical in a market where demand has not kept pace with the increase in available homes.

Looking Forward

The current state of the housing market reflects challenges that have persisted through these recent months. With economic uncertainty casting shadows over buyer confidence, the apparent mismatch between listings and sales is likely to continue until a more favorable economic climate is fostered. As more properties linger on the market, buyers not only gain variety but also leverage to negotiate, making the upcoming months crucial for both homeowners and potential buyers in navigating the complexities of the real estate landscape.

In conclusion, while sellers are taking steps to incentivize buyers through price cuts, economic hurdles and high living costs remain barriers to achieving a balanced housing market. The landscape in the coming months will determine how these dynamics will shift, impacting both buyers and sellers in their real estate journeys.