The question on everyone’s mind right now: Are home prices going to fall in 2025? After years of volatility, interest rate hikes, and affordability struggles, it's no surprise buyers and sellers alike are wondering if a correction is coming — or already underway.

Let’s break down what’s actually happening in the market right now and what you need to know heading into 2025.

What Is a Housing Market Correction?

A housing market correction is not a crash. It’s a natural realignment of home prices when they’ve risen too fast or outpaced what the market can reasonably support. Corrections usually involve modest price declines or a plateau in appreciation — often between 5% to 10% — and happen to restore balance between buyers and sellers.

According to Fannie Mae, many experts don’t expect a full-blown crash in 2025, but some markets could absolutely see price adjustments based on local supply and demand.

What the Data Says So Far

• Inventory is increasing. As of mid-2024, active listings were up over 30% compared to the previous year, according to Realtor.com’s Housing Market Update. More supply = less upward pressure on prices.

• Price cuts are rising. Redfin’s data shows a growing number of homes experiencing price reductions, especially in overheated markets that saw major gains in 2021–2022.

• Home price growth is slowing. According to the National Association of Home Builders, year-over-year home price growth is cooling, with some metro areas even experiencing small declines.

Why This Isn’t 2008 All Over Again

Let’s be clear: This isn’t a repeat of the housing crash. Lending standards have remained tight, and the majority of homeowners have locked in low fixed-rate mortgages. There’s no massive wave of foreclosures looming, and homeowner equity is at record highs.

In fact, CoreLogic reports that the average homeowner gained more than $28,000 in equity over the past year. That’s a very different picture than the one we saw leading into the Great Recession.

What Buyers and Sellers Should Expect in 2025

• Buyers: A correction could be good news — more homes to choose from, fewer bidding wars, and in some markets, slight price drops. But don’t expect rock-bottom deals. Instead, focus on affordability and monthly payments, especially if mortgage rates come down.

• Sellers: If you’re planning to list in 2025, pricing your home realistically is key. Homes that are overpriced are sitting longer and requiring price cuts. A competitive price upfront can still lead to strong interest.

• Investors: Pay close attention to regional trends. While some markets may correct, others — especially those with strong job growth or limited new construction — could remain stable or even grow.

Want a deeper dive into market-by-market forecasts? ATTOM Data Solutions regularly publishes local housing trends and heat maps to keep an eye on.

Bottom Line

Yes, some housing markets may see a correction in 2025 — especially areas that saw rapid appreciation over the past few years. But this is not a crash. It’s a rebalancing. And if you're buying, selling, or refinancing, it's more important than ever to work with someone who understands how local dynamics affect your strategy.

If you're wondering what the numbers look like in your specific area or want to build a plan based on your goals, I’m here to help.

Let’s take the guesswork out of the market — and take the next step together.