Higher inventory has helped slow price growth, but sellers who can wait for more favorable conditions are starting to walk away, keeping prices elevated.

Homebuyers may have taken the driver’s seat in the housing market, but so far, they’re not stepping on the gas.

There is no question that negotiating power has swung in homebuyers’ favor over the first half of 2025. Nationwide, there are almost 30% more active listings on the market than last year. Home price growth is decelerating and even turning negative in some regions. The May Case-Shiller report showed the national price index up only 2.3% year-over-year, while the seasonally adjusted national index declined 3.4% — its third straight month in the red. Month-over-month changes have turned even more sharply negative in expensive West Coast markets like Seattle and San Francisco.

Does this mean another crash, or even a major price correction, is coming?

Probably not. To understand the current ebb in home price growth, consider the recent cooldown from late 2022 to early 2023, when higher mortgage rates put homebuyer demand on ice. The parallels between then and now begin with affordability — like today, the double-whammy of high mortgage rates and high prices two years ago locked many buyers out of the market. And as demand slackened, inventory built up. That put downward pressure on prices, as sellers felt the heat of competition from similar listings down the block, and the remaining buyers began to flex their negotiating prowess.

But sales volume never picked back up. Existing home sales fell to an annualized rate of about 4 million by the end of 2022, a level last seen in the aftermath of the global financial crisis, and total home sales remained near 4 million in 2023 and 2024.