Rising Inventory and Buyer Demand Could Reshape the Housing Market by Year-End

After several years of steadily increasing home prices and a slowdown in transactions, the U.S. housing market might finally be headed for a shift. Industry experts are signaling that as the second half of the year unfolds, the market could experience a noticeable change. The key? A steady rise in available homes for sale combined with lingering buyer demand that’s been held back by economic uncertainties.

 

In a recent midyear market review hosted by ATTOM, a leading property data provider, real estate analyst and Altos Research founder Mike Simonsen offered insights into where the market could be headed. According to Simonsen, a mix of rising inventory and buyer motivation may help push home sales upward—especially if home prices begin to stabilize or even soften in certain areas.

 

“Sales volume is starting to pick up because more homes are available on the market,” Simonsen explained during the presentation. “That increase in inventory is what’s enabling more transactions to happen.” He added that as competition among listings intensifies, more homeowners may feel pressured to adjust their pricing expectations and offer discounts to attract buyers.

 

So far, however, this scenario has yet to fully materialize. Home sales have remained sluggish throughout the spring months, largely due to ongoing concerns about the economy, persistent inflation, and mortgage rates that continue to challenge affordability. Buyer hesitancy has been palpable, particularly among first-time homeowners trying to navigate high borrowing costs and limited purchasing power.

 

This isn’t the first time experts have predicted an uptick in market activity, only for it to be derailed by rising interest rates. In past years, similar patterns were forming—until mortgage rates climbed abruptly, dampening any momentum. Although rates are still high by historical standards, there’s growing optimism that they may gradually ease later this year, which could unlock additional buyer activity.

 

The underlying factor that many believe will tip the market is inventory. Housing stock has finally returned to levels not seen since before the pandemic, and projections indicate that this upward trend will likely continue through the fall. That additional supply is already influencing market behavior and price trends.

 

Simonsen pointed out that in 11 states, home prices are now at or even slightly below where they were at the start of 2024. One notable region seeing a shift is the Northeast, where home prices have historically remained high due to a severe lack of listings. Even there, inventory is beginning to rise—something that hasn’t happened at this pace in quite some time.

 

“We’re likely reaching the point where we have enough homes on the market for the prevailing narrative—‘sales are down, but prices are up’—to start reversing,” said Simonsen. That means we could be entering a period where more homes are sold while price appreciation slows or dips. However, Simonsen doesn’t expect any significant price crashes unless mortgage rates spike dramatically, as they did in the fall of 2022.

Another evolving trend worth noting is the length of time homeowners are staying in their properties. According to ATTOM’s Head of Data Science, Aaron Wagner, people are holding onto their homes longer than ever before. The latest data reveals that the average homeownership tenure is now 8.1 years—the highest figure ATTOM has ever recorded. Just two years ago, that average was 7.4 years, and a decade ago, homeowners typically sold every four to five years.

Wagner emphasized the broader implications of this shift. “It suggests that many homeowners are either unwilling, financially unable, or just not confident enough to sell and move in today’s market,” he explained. “This behavior directly affects the number of homes for sale and, by extension, the dynamics of the housing market.”

Fewer people moving translates to fewer listings, which has been one of the reasons inventory remained tight for so long. Now, as some of those homeowners begin to re-enter the market, we’re seeing the early signs of a more balanced supply-and-demand scenario.

If mortgage rates decline modestly and inventory continues to grow, there’s a good chance that buyers who’ve been sitting on the sidelines could re-engage with the market. This would not only boost sales numbers but could also relieve some of the pressure that’s been keeping prices high, particularly in previously overheated markets.

All of this paints a picture of a housing market that is finally showing signs of normalizing. While it’s unlikely we’ll see dramatic price drops, the gradual rebalancing of supply and demand could mean more opportunities for both buyers and sellers as 2025 progresses.

Whether you’re thinking about buying your first home, listing your current one, or simply trying to navigate the current market, having an experienced real estate professional by your side can make all the difference.