U.S. Housing Market Appears to Be Slowing Down: Q1 2025 Update

According to several recent reports, the U.S. real estate market appears to be slowing down in the first quarter of 2025. Nationwide, homes are staying on the market for longer stretches of time before going under contract.

This trend should interest home buyers and sellers alike, though for different reasons.

A real estate market slowdown could give home buyers more negotiating leverage through the rest of 2025. For sellers, it underscores the importance of competitive pricing when listing a home for sale.

Here are five key points covered in this report:

1. The U.S. housing market is slowing down in early 2025, with homes taking longer to sell compared to the previous year.
2. Factors contributing to the slowdown include higher mortgage rates, economic uncertainty, and an increase in housing inventory.
3. Buyers benefit from this trend with more negotiating power, reduced competition, and extra time for due diligence.
4. Some metro areas, like Pittsburgh, are experiencing the slowest home sales, while others, like San Jose, remain highly competitive.
5. Despite the slowdown, home prices are still expected to rise gradually through 2025 and into 2026.

U.S. Real Estate Market Slowing Down in 2025

You probably already know that the real estate market moves through cycles of high and low activity, including seasonal variations.

But many of those ups and downs are simply a blip on the radar. To get a better sense of what’s happening in the real estate market, we need to zoom out and look at the long-range picture.

For example, when we compare the current pace of home sales to a year ago, we can see that the U.S. real estate market has clearly slowed down in 2025.

Exhibit 1: The Redfin Data Center

The latest confirmation of this trend comes from the Redfin data center. The national real estate brokerage monitors many different market stats, including the median days on market.

Definition: The median “days on market” (DOM) metric indicates how long it takes for homes in a specific area to sell. Specifically, it shows the midpoint for the number of days it takes homes to go under contract after being listed for sale.

Generally speaking, a higher number of days on market reflects a slower real estate market, while a lower number indicates a faster pace of home sales.

Here’s how this metric has changed over the past year, nationwide:

• March 2024 median DOM: 40 days
• March 2025 median DOM: 54 days

This shows that the U.S. real estate market has slowed down over the past year. On average, homes are currently taking about 14 days longer to sell, compared to a year earlier.

Exhibit 2: February Realtor.com Report

For more evidence of this trend, we can look to the latest Monthly Housing Report from Realtor.com, published in February.

In addition to showing an increase in the median days on market, this report provided more context on the slowdown trend:

“Homes are staying on the market longer, and February 2025 is the 11th month in a row where homes have spent more time on market compared to the previous year. Homes in February spent on average 66 days on the market…”

The Slowest and Fastest Markets in 2025

The Realtor.com report mentioned above includes housing market data for the 50 largest metropolitan areas in the U.S. This gives us a sense of what’s happening nationwide, as well as in local markets.

Here’s a breakdown of the slowest and fastest U.S. real estate markets in early 2025, based on the median days on market metric.

The 5 Slowest Markets (Highest Median DOM)

Among the nation’s 50 largest metro areas, the following markets had the slowest pace of home sales as of February 2025:

1. Pittsburgh, Pa. (86 days)
2. Buffalo-Cheektowaga, N.Y. (79 days)
3. San Antonio-New Braunfels, Texas (76 days)
4. Portland-Vancouver-Hillsboro, Ore.-Wash. (75 days)
5. Kansas City, Mo.-Kan.  (75 days)

The 5 Fastest Markets (Lowest Median DOM)

The housing markets below had the lowest median days on market last month. This means they’re moving at a relatively fast pace, likely due to tight supply and strong demand.

1. San Jose-Sunnyvale-Santa Clara, Calif. (22 days)
2. San Francisco-Oakland-Fremont, Calif. (30 days)
3. Boston-Cambridge-Newton, Mass.-N.H. (33 days)
4. San Diego-Chula Vista-Carlsbad, Calif. (34 days)
5. Washington-Arlington-Alexandria, DC-Va.-Md.-W. Va. (34 days)

The takeaway: Among the nation’s 50 largest metro areas, San Jose (Silicon Valley) is the fastest real estate market while Pittsburgh is the slowest.

Three Factors That Have Led to This Trend

Real estate trends are driven by many overlapping factors. It’s rarely just one thing that causes the market to change.

That’s the case here as well.

The slower pace of home sales that we are seeing today (versus a year ago) could be attributed to several factors, including the following:

1. Higher Mortgage Rates

While rates have decreased slightly from earlier this year, they remain elevated compared to pandemic lows. This has had a cooling effect on the market by reducing affordability.

Experts anticipate that mortgage rates will likely moderate but not decrease substantially throughout 2025. So the affordability challenges mentioned above could persist for the foreseeable future.   

2. Economic Uncertainty

Economic uncertainty, including concerns about job security and a potential recession, is a major factor contributing to home buyer hesitancy in early 2025.

When people feel uncertain about the economy in general—and their income situation in particular—they are less likely to make a major purchase like buying a house.

Anxieties about inflation, government debt, and potential layoffs appear to be having a cooling effect on the real estate market. Forecasts suggest a general slowdown in U.S. economic growth in 2025, with persistent inflation risks.

According to Fannie Mae’s latest “Home Purchase Sentiment Index,” published in January:

“The percentage of respondents who say it is a good time to buy a home decreased from 23% to 22%, while the percentage who say it is a bad time to buy increased from 77% to 78%.”

And here’s a quote from a recent University of Michigan consumer survey:

“Consumer sentiment extended its early month decline, sliding nearly 10% from January [2025]. The decrease was unanimous across groups by age, income, and wealth.”   

3. More Homes on the Market

According to the Realtor.com report cited above, total active real estate listings across the United States increased by 27.5% over the past year. This means there are significantly more homes on the market today, when compared to a year ago.

This is another reason why the real estate market has slowed down in 2025.

When there are more homes on the market, buyers have more choices and less competition. So they can take extra time to decide which property best meets their needs.

Increased inventory also removes some of the urgency from the home buying process, contributing to an overall slower pace within the housing market.

How Buyers Benefit From a Slower Market

A slower market pace benefits home buyers in several ways, mainly by giving them more negotiating leverage and additional time for due diligence.

Here are some of the ways buyers can benefit from a real estate slowdown:

• More Negotiating Power: Sellers may be more eager to sell when properties linger on the market. This can give buyers the chance to negotiate for a lower purchase price or ask for extra perks like covering closing costs.
• Reduced Competition: With fewer buyers actively competing for homes, you’re less likely to encounter overheated bidding wars. This means you can make a confident offer without the pressure of competing bids.
• Time for Due Diligence: When homes take longer to sell, buyers have extra time to inspect and evaluate properties, compare options, validate asking prices, and ensure the home meets all their needs.
• Wider Selection of Homes: A slower market often results in a larger pool of available homes. More time on the market can lead to a greater variety of listings, giving you a better chance of finding a property that fits your criteria.
• Price Reductions: In a slow market, home prices can stabilize or even drop. This can mean you’re less likely to overpay and might even secure a better deal than you would in a faster, more competitive market.

Home Prices Expected to Keep Climbing

Despite the slower pace we’re seeing these days, home prices are expected to continue rising gradually throughout the rest of 2025 and into 2026.

According to a recent forecast from researchers at 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.”

But this outlook applies to the nation as a whole. And as you probably already know, real estate trends can vary significantly from one city or region to the next.

Home buyers should carefully research local real estate trends prior to entering the market. It’s one of the most important preliminary steps in the home buying process.

Disclaimer: This report contains forward-looking views such as market predictions and forecasts. They are the equivalent of an educated guess and should be treated as such.