Interest rates continue to test homebuyers this spring, but the market might be trending in their favor as listings surge and home prices show signs of tapering in some areas.¹

The rate on 30-year, fixed mortgages averaged 6.76% in the week ending May 1, staying within the 20 basis-point range that’s persisted since late winter, according to Freddie Mac’s weekly lending survey.²

Sales of existing homes slowed to an annual pace of just 4.02 million in March 2025, a 5.9% drop from February and a 2.4% decline from a year ago, according to the National Association of Realtors.³

Despite the sluggish start to the spring season, first-time home buyers accounted for 32% of sales in March, up from an all-time low of 24% in November.⁴

Read more: Will 2025 be the year of the first-time home buyer?

Home listings surge 

There are definitely more homes to choose from. The number of previously owned homes on the market increased to 1.33 million units in March 2025, 8% more than February and nearly 20% more than March 2024.⁵

The inventory of existing homes for sale now equals four months of supply, much closer to the six months of supply that’s seen as ideal for a balanced market between buyers and sellers.⁶

Listings have jumped in many large metro areas, including San Diego, Las Vegas, Atlanta and Washington D.C. And more sellers seem willing to cut deals.⁷ Seller concessions to buyers for things like home repairs and closing costs are near record highs.

Some buyers are opting for new homes as homebuilders continue to offer their own incentives to reduce inventories.⁸ New home sales increased to 724,000 single-family units in March, according to the U.S. Census Bureau, a 6% increase from a year ago.⁹

Read more: Sellers sweeten the deal: 44% help with closing costs and repairs 

Easing prices? 

In addition to supply and incentives working in buyers’ favor, there are indications home price gains are slowing nationally, with some areas of the country registering price declines since last year.¹⁰

About two-thirds of Gen Z and Millennials say higher home prices and mortgage rates are among their biggest financial stressors, according to Empower research.

Prices for single-family homes grew a less robust 2.7% nationally in 2024, compared to more than 6% percent the prior year, according to one analysis of home value data from Intercontinental Exchange.¹¹

Price swings vary widely in different pockets of the U.S. Prices have fallen in many parts of the Sunbelt where people moved during the pandemic. Texas cities like Austin, Dallas, and Houston have price declines, as do some parts of Florida, especially the Gulf Coast. Sarasota County in Florida has seen a 7.3% annual drop in prices.¹² 

It’s been an entirely different story in the Midwest and Northeast, where inventories are lower and demand high in select spots. Buyers in affordable housing markets like Toledo, Ohio, are seeing increased competition from investors, leading to an 18% spike in sales prices over the past year.¹³

Welcome relief 

On a nationwide basis, Zillow is predicting that prices will drop 1.9% by year’s end, citing increased listings and elevated mortgage rates. Americans who can afford to buy are getting more time to decide while sellers are cutting prices to attract bids, Zillow said.¹⁴

If the forecast becomes reality, it would be the first notable annual decline in nationwide home prices since 2012 — and welcome relief to buyers.¹⁵

The median home price in the U.S. has risen 31% in the past five years from $317,100 in 2020 to $416,900 in 2025, according to Federal Reserve data.¹⁶

The trend is more pronounced in cities popular among young professionals. The number of cities with starter homes costing at least $1 million has grown from 85 to 233 since 2020, according to an analysis from Zillow. Such cities were spread across 25 states, with the most in California, New York, New Jersey, Florida, and Massachusetts.¹⁷

Read more: America’s cities are back: Where people are moving