Many Fear a Housing Market Crash in 2025 – Will It Happen?

Between every economic uncertainty underpinning this year so far, Americans are understandably trepid about the future. Amid market lows and rising prices, many are asking if we’re heading for a housing market crash in 2025.

If talk of tariffs and mercurial markets are giving you pause about your plans, you’re not alone. In fact, new data from Clever Real Estate has found that 70% of Americans are worried about a housing crash in 2025. But how likely is this, and what does the latest data say?

Low Inventory Prevents a Crash in Prices

Before you put your plans to buy or a sell a home on hold, let’s look at the facts. The reality is that the trends in the housing market we’re seeing aren’t signs of crashing, only of shifting. As Chief Economist at First American Mark Fleming explains:

“There’s just generally not enough supply. There are more people than housing inventory. It’s Econ 101.”

Consider the basic laws of supply and demand. If the supply of something is low, its prices are bound to go up, and homes are no exception. And even though housing inventory is up in 2025, high demand from buyers is still driving home prices higher.

According to recent data from Realtor.com, the number of homes for sale in 2025 is climbing, but still below normal levels. Even still, home supply is at its highest since pre-pandemic levels, showing a positive trend in the right direction.

That ongoing low supply is what’s stopping home prices from dropping at the national level. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:

“… if there’s a shortage, prices simply cannot crash.”

Home Prices Normalize as Inventory Increases

As more homes are listed on the market, upward pressure on home price growth normalizes. Prices may not be falling, but they’re rising at a rate closer to what we’d consider normal for the market.

Even though prices aren’t declining nationally, increased inventory means they’re rising more slowly than they were. The trend we’re currently seeing is what’s considered price moderation.

The good news for buyers is that this price moderation is expected to continue throughout the rest of the year, according to a January report from Freddie Mac:

“In 2025, we expect the pace of house price appreciation to moderate from the levels seen in 2024, while still maintaining a positive trajectory.”

This means that home prices will continue rising in most markets, but not as quickly as they did in 2024. This is great news for anyone who’s been priced out of the market thanks to rapid price appreciation these past few years.

These numbers represent national trends, so the true story will vary in individual markets. A local real estate agent can give you the latest details on the market trends in your your own unique area.

Conclusion

Fears of a housing market crash in 2025 abound, but don’t let this worry you. While a little caution is healthy, experts are confident that a housing market crash is unlikely in 2025. As a recent report from Business Insider says:

“. . . economists who study housing market conditions generally do not expect a crash in 2025 or beyond unless the economic outlook changes.”

In reality, this year’s housing market is stabilizing thanks to decreasing price growth and increasing home supply. If you’re curious about the market trends in your local area, contact us today to connect with an agent who can reassure you with the facts.