For potential homebuyers, the U.S. housing market is hard to read right now.
Affordability remains an obstacle, with elevated mortgage rates and a median home price of $442,000 — up 0.9% from a year ago, according to Redfin data.
However, inventory is rising in many markets, especially in the South, giving buyers more leverage to negotiate prices. Redfin expects home prices to decline 1% year over year by the end of 2025, a forecast that aligns with Zillow’s projected 1.4% drop over the same period.
Overall, the market is “a mixed bag,” says Ben Jacobs, a real estate broker with Douglas Elliman. “On one hand, we’re seeing more inventory and seller concessions, which offer some breathing room for buyers. On the other, mortgage rates aren’t expected to drop significantly anytime soon, which continues to impact affordability.”
Most major forecasts expect 30-year fixed mortgage rates — currently around 6.85% — to stay above 6% throughout the year, consistent with where they’ve been so far in 2025:
Tariffs are adding to the uncertainty. Tariffs on building materials are expected to drive construction costs higher, which could slow new homebuilding and add upward pressure to prices.
“It’s a catch-22 for homebuyers,” Chen Zhao, Redfin’s head of economics research, wrote in a May statement. “Mortgage rates are unlikely to fall unless all of the new tariffs are eliminated, or if the country falls into a fairly severe recession — which would cut housing budgets for many Americans.”
Should you buy a home now?
Buyers have more negotiating power than they did a year ago, due to more inventory on the market, fewer bidding wars and a growing share of sellers offering concessions.
Price reductions are more common. In May 2025, about 22% of listings had price cuts, a year-over-year increase of roughly five percentage points, according to Redfin’s most recent data.
Sellers are increasingly willing to offer other incentives, too. In April, Redfin reported that sellers gave concessions in 44% of home sales — about 10 percentage points higher than last summer. These concessions are separate from price reductions and include money toward repairs, closing costs or mortgage-rate buydowns.
Housing inventory is improving in several markets. States such as Texas, Florida, Tennessee and Colorado now have more homes for sale than they did before the Covid-19 pandemic, according to Realtor.com.
Now is “still a good time to buy, especially for well-prepared buyers who find a home that fits their long-term needs and can negotiate favorable terms,” says Jacobs. He notes the risk that “new tariffs on building materials could push prices higher again, particularly for new construction.”
“This summer presents a real opportunity for serious buyers,” says Nancy Batchelor, vice president at real estate firm Compass. But with a still-shifting market, she cautions that buyers should be prepared and realistic about what they can comfortably afford.
“Timing the market perfectly is nearly impossible,” she says, but finding the right home at a price and payment that fits your budget “is always a smart move.”
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