How to think about home prices for the rest of 2025

Available inventory of homes on the market is back to the pre-pandemic range, with 826,000 single-family homes unsold on the market as of mid-June. That’s 32% more than this time last year. It took three full years, but the supply of unsold homes has finally built sufficiently to put downward pressure on prices. Demand remains very slow, so this trend looks unlikely to change any time soon.

Meanwhile, because of pandemic-led tight inventory, home prices climbed in 2022, finishing the year up 6% over 2021. The calendar year 2023 started off very weak, but home prices finished up 5%. Last year, surprisingly — after a third year of mortgage rates in the 6s and 7s — home prices climbed 4% again. Even as inventory grew, there were sufficient buyers to buoy prices just a…