March 2025 Housing Market Update: What's Driving Prices and Buyer Demand?

Wondering what’s really going on with the housing market?
There’s a lot of noise out there, but we’re here to help you cut through it. At Nuvision, we know staying informed is key—especially when you’re making big decisions about your home, your future, or your finances. That’s why we regularly bring in trusted experts to break down what’s really going on in the economy, so you can make smarter choices, manage your money more confidently, and build the life you want.

One of those experts, economist Dr. Chris Thornberg, joined us for our recent 2025 Economic Forecast webinar. He shared his no-spin insights into the housing market—and a few surprising predictions about what could be coming next.

High Prices, Low Inventory: What’s Really Driving the Market

According to Dr. Thornberg, the U.S. housing market is experiencing a significant decline in sales driven primarily by high-interest rates. Despite this slowdown, the lack of available inventory continues to push home prices upward, with the median single-family home price surpassing $450,000—a new record high. Thornberg points out that the real issue isn't a lack of buyers, but rather a shortage of sellers. Many homeowners are hesitant to sell due to their low-rate mortgages, creating a bottleneck that keeps inventory tight and prices high.

Regionally, Thornberg highlighted stark contrasts. "On the West Coast, home prices continue to surge," he noted. "California is approaching a median/average home price of $900,000, Washington is nearing $700,000, Oregon is at $500,000, and Alaska median home prices are close to $400,000." Interestingly, even within California, regions such as Stockton, Fresno, and Sacramento are experiencing substantial income growth, particularly among Hispanic and African American households. The biggest challenge these areas face? Limited labor supply and insufficient housing permits, which stifle potential growth compared to states like Texas and Arizona, which actively build housing and consequently grow their labor forces.

Thornberg also addressed affordability, emphasizing that while today’s housing affordability is challenging, it mirrors conditions from past decades when markets were still active. He explained that builders face significant challenges supplying mid-level housing, largely due to restrictive zoning and rising building costs. "Builders now need to deliver housing where it’s needed, which is harder and more expensive," he said.

Steven Thomas: The Calm Before the Storm?

Real estate expert Steven Thomas described the current housing market as "the calm before the storm," noting that conditions are unusually favorable for buyers right now. Increased inventory and reduced competition offer a rare window of opportunity. “Now is the best market in years for buyers,” Thomas said. But he also cautioned that this moment won’t last. As soon as mortgage rates come down even slightly, buyer demand is expected to surge—driving up competition and pushing prices higher.

Dr. Thornberg echoed this urgency during our 2025 Economic Forecast Webinar. While there’s still a lot of uncertainty ahead, he emphasized that waiting on perfect conditions could mean missing your chance. Both experts agree: if you're in a position to buy, acting sooner rather than later could be the smarter move.  Thornberg also cautioned that consumers should stay within there means when making a big purchase, like a a house.  “If you want to buy that car, you want to buy that house, now might be the time to go out and do it, but don't get out over your skis -- don't over buy.” 

Zillow: Buyers Remain Cautious Amid Rising Inventory

Zillow reported existing home sales rose 4.2% in February to 4.26 million but were still down 1.2% from a year ago, despite similar mortgage rates. Growing inventory, now at 1.24 million units, hasn’t spurred sales as expected. Buyers seem cautious, possibly waiting for prices to decrease or trying to save larger down payments to ease monthly burdens.

The Federal Reserve has maintained interest rates at 4.25% to 4.5%, waiting for more clarity on economic policies. Mortgage rates remain near recent lows, potentially offering a good opportunity for financially secure buyers. Yet, uncertainty around inflation and economic growth might keep rates relatively stable, and potential homebuyers might adopt a cautious, wait-and-see approach until they feel more secure.

Redfin: High Costs Keep Many Buyers on the Sidelines

Redfin highlighted the struggle buyers face with near-record housing costs. The average monthly payment of $2,793 is almost at an all-time high, driven by rising home prices and high mortgage rates. Despite increased activity like home tours and mortgage applications, pending home sales are down 5.2%. Redfin suggests improvement may occur if mortgage rates decline, but affordability remains a significant challenge.

Still, early-stage buying signals are promising. Redfin’s Homebuyer Demand Index recently reached its highest level in three months, and new listings rose by 5.5% year over year. According to Redfin agent Heather Mahmood-Corley, while some buyers remain cautious due to economic concerns, others recognize the market isn’t returning to 2020 levels and are beginning to re-engage, making it possible for buyers to negotiate more favorable terms.

National Association of REALTORS®: Positive Signs of Market Stabilization

Lawrence Yun, NAR’s chief economist, noted positive signs in the housing market with stabilizing mortgage rates and increased inventory. After two challenging years with historically low sales, conditions are improving. Yun anticipates home sales will rebound significantly due to rising incomes and anticipated Federal Reserve rate cuts, with mortgage rates expected to stabilize between 6% and 7%.

Yun also pointed out that the high mortgage rates of recent years are easing as inflation becomes more manageable. While rates likely won’t return to historic lows due to rising national debt, they're expected to settle into a range comfortable enough to encourage a healthier housing market. Increased apartment supply and steady rental rates should further stabilize overall housing affordability.

Housing Is Just One Piece of the Puzzle! Learn What Else Is Currently Influencing the Economy.

We’re here to help you make smart moves, not just speculations—because building the life you want starts with having the right information. Want to hear everything Dr. Thornberg had to say about what’s really happening and what we can expect in the short-term with the overall economy? Catch the full replay of our 2025 Economic Forecast Webinar Here.