Redfin sees affordability improving as sellers adjust to new market realities
Home prices may be headed for a decline as a growing imbalance between buyers and sellers tips the housing market in favor of buyers, according to a new report from Redfin.
Redfin projects that US home prices will fall 1% year over year by the end of 2025, citing a record-high gap between the number of sellers and buyers as the primary driver behind its forecast.
The median monthly mortgage payment across the US was $2,860 during the four weeks ending May 25, up 3.6% from the same period last year and just $25 shy of the all-time high, according to Redfin.
Two key factors are keeping payments high: The average 30-year mortgage rate sits at 6.86%, the highest in three months, and the median home-sale price is up 1.9% year over year.
These elevated costs, combined with economic uncertainty, have kept many buyers on the sidelines. Pending sales are down 1.7% year over year, and Redfin’s Homebuyer Demand Index, which tracks tours and buying activity, has remained flat month-over-month. Notably, 14% of homes under contract are falling through, the highest rate for this time of year since the early pandemic.
Redfin reports that home-sale prices are already falling in 11 of the 50 largest metro areas, with the steepest declines observed in Oakland, Dallas, and Jacksonville. Redfin economists believe these early declines could signal broader price softening in the months ahead.
"The balance of power in the US housing market has shifted toward buyers, but a lot of sellers have yet to see or accept the writing on the wall," Redfin senior economist Asad Khan said in the report.
"Many are still holding out hope that their home is the exception and will fetch top dollar. But as sellers see their homes sit longer on the market and notice fewer buyers coming through on tour, more of them will realize that the market has adjusted and reset their expectations accordingly."
Buyer-seller gap at record high
As of April 2025, there were approximately 1.9 million active home sellers and an estimated 1.5 million buyers, resulting in a 490,041 seller-to-buyer imbalance, equivalent to a 33.7% gap. This is the largest buyer-seller imbalance since Redfin began tracking in 2013.
For context, sellers only outnumbered buyers by 6.5% a year ago.
The recent surge in seller listings coincides with a drop in active buyer interest. In fact, the number of buyers in April 2025 was the second lowest since Redfin began collecting data, surpassed only by April 2020, at the start of the pandemic.
With supply outpacing demand, sellers are competing for fewer buyers, creating a buyer’s market in many regions and leading to greater negotiating leverage for homebuyers.
The report notes that 44% of homes listed in April had been on the market for 60 days or more, the highest April figure since 2020. In many cases, stale listings are the result of overpricing, as sellers continue to base expectations on outdated comps from the seller’s market peak.
"Sellers are realizing we’re in a new market, which is making them flexible," said Venus Martinez, a Redfin Premier agent in Los Angeles.
"A lot of sellers, especially those who may have bought at the top of the market and need to sell, are willing to accept less money for their homes, give concessions to buyers, and even negotiate commissions."
Read next: Soaring interest rates cause pending home sales to plummet in April
Martinez added that buyers can often negotiate better deals if the home has sat on the market for several weeks or if a prior contract fell through.
The total number of homes for sale is up 11.9%, while new listings are up 3.9% compared to last year. As inventory builds and price growth stalls, or reverses, affordability is expected to improve later in 2025.
Redfin economists also note that wages are forecast to continue rising, which, combined with easing home prices, could make the second half of the year more favorable for mortgage borrowers.
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