The U.S. housing market is gradually returning to pre-pandemic conditions, with more homes available for buyers and less competition compared to recent years. As of December 2024, the number of homes on the market approached one million, the highest December inventory since 2019. While the overall supply remains 25% below the 2018–2019 average for this time of year, it is significantly better than the extreme shortages seen during the pandemic, when inventory fell to a 51% shortfall in early 2022.
As more sellers enter the market, price growth is also slowing, creating a more balanced environment for buyers and sellers alike. Zillow's Market Heat Index indicates that, for the first time since 2019, the housing market is in neutral territory. With home values stabilizing in many metro areas, buyers may find better negotiating power heading into 2025.
Home Prices and Market Conditions
The typical U.S. home value in December 2024 was $358,461, with a monthly mortgage payment of $1,844 assuming a 20% down payment. Home values declined in 45 out of the 50 largest metro areas, showing signs of a cooling market.
The largest price drops were seen in Tampa (-0.9%), Austin (-0.8%), New Orleans (-0.7%), Buffalo (-0.7%), and Atlanta (-0.7%).
Only Louisville saw an increase in home values, rising 0.2%.
Home values remained steady in Salt Lake City, San Jose, Washington, D.C., and Oklahoma City.
Year-over-year, home values increased in 42 out of 50 major metro areas, with the highest gains in San Jose (7.9%), Providence (6.7%), Hartford (6.5%), Cleveland (6.4%), and New York (6.4%).
The largest annual declines occurred in Austin (-3.2%), Tampa (-2.5%), San Antonio (-1.8%), New Orleans (-1.4%), and Jacksonville (-0.9%).
While mortgage rates remain elevated—contributing to affordability challenges—the increase in housing supply has helped slow price appreciation. The typical monthly mortgage payment has risen by 1.6% since last year and is up 109.7% since pre-pandemic levels, reflecting the impact of higher interest rates.
Housing Inventory and New Listings
More homes are available for buyers, providing them with more choices than in previous years. Active inventory in December increased by 16.8% compared to last year, while the number of new listings declined by 30.9% month over month, a seasonal trend typical during the winter months.
Key inventory insights include:
Total inventory remains 25.1% below pre-pandemic levels.
Homes are staying on the market longer, with a median age of inventory at 82 days.
The number of price cuts increased slightly, with 17.2% of listings seeing reductions, up 1.7 percentage points from last year.
Fewer homes are selling above list price, with 26.9% of homes selling for more than asking, down 2.4 percentage points from last year.
Buyers vs. Sellers: A More Balanced Market
For the first time in five years, the housing market is evenly balanced between buyers and sellers, according to Zillow's Market Heat Index. This means neither buyers nor sellers have a strong upper hand, creating more room for negotiation.
The strongest sellers' markets include San Jose, San Francisco, Hartford, Buffalo, and Boston, where demand remains high.
The strongest buyers' markets are Miami, New Orleans, Jacksonville, Indianapolis, and Pittsburgh, where homes are sitting longer on the market and price cuts are more common.
Rental Market Trends
Rents have also shown signs of stabilization, falling 0.2% month over month in December, which aligns with the pre-pandemic seasonal trend. However, rents remain 3.4% higher than a year ago.
Rent prices decreased in 32 of the 50 largest metro areas, with the largest monthly drops in Denver (-1.3%), Salt Lake City (-0.6%), San Jose (-0.6%), Portland (-0.6%), and Austin (-0.5%).
Annual rent increases were highest in Hartford (7.9%), Cleveland (7%), Richmond (6.5%), Providence (6.2%), and Chicago (5.8%).
What This Means for Buyers and Sellers in 2025
With inventory continuing to recover and price growth slowing, buyers entering the market in 2025 may find more negotiating power than in previous years. However, mortgage rates remain a key affordability challenge, keeping monthly payments high. The return of sellers who had been hesitant due to higher interest rates could further increase inventory, offering buyers even more options.
For sellers, realistic pricing and strategic marketing will be crucial, particularly in metro areas where price declines have been more pronounced. While demand remains steady in certain regions, the days of bidding wars and rapid price escalation have largely passed.
As the market continues to stabilize, both buyers and sellers should remain informed and flexible in their approach, ensuring they make the most of the evolving housing landscape in 2025.
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