Navigating the New Normal: Understanding Housing Market Dynamics

The Pulse of Home Price Momentum

Keeping a close eye on active listings and months of supply is crucial when assessing the momentum of home prices. An uptick in active listings, alongside homes lingering longer on the market, might signal impending price softness. On the flip side, a sharp decrease in listings could indicate a heating market.

The Rise in National Active Listings

From January 2024 to January 2025, active listings rose by 24.6% nationally, suggesting that homebuyers have gained negotiating power, leading to more balanced or buyer-friendly markets in various regions. However, despite this increase, the inventory is still 25.3% below January 2019 levels, indicating that while some markets are loosening, others remain tight.

Historical Inventory Trends

  • January 2017: 1,154,120

  • January 2018: 1,043,951

  • January 2019: 1,110,636

  • January 2020: 951,675

  • January 2021: 531,775

  • January 2022: 376,970

  • January 2023: 616,865

  • January 2024: 665,569

  • January 2025: 829,376

These numbers reflect a volatile market, with significant fluctuations due to various external factors.

Florida: A Case Study in Market Dynamics

Florida has seen one of the most dramatic increases in inventory. Initially, the surge was concentrated in Southwest Florida, particularly after Hurricane Ian in 2022, where damaged properties increased supply while demand waned due to high costs and insurance issues. More recently, markets like Jacksonville and Orlando have also seen inventory levels climb above pre-pandemic norms, influenced by regulatory changes following the Surfside condo collapse and a cooling in work-from-home migration.

Regional Disparities in Inventory Recovery

By December 2024, nine states had surpassed pre-pandemic inventory levels, but this number dropped to three by January 2025. This decrease isn't due to a halt in inventory growth but rather a denominator effect from lower inventory in previous years.

Why Sun Belt and Mountain West Markets Differ

The rapid return to pre-pandemic inventory in these regions can be attributed to:

  • Price Growth Outpacing Income: Areas like Colorado Springs and Austin saw prices soar, making homes unaffordable once migration slowed and interest rates rose.

  • New Construction Impact: Unlike the Northeast and Midwest, these areas have seen more new housing projects, which, with affordability adjustments like rate buydowns, have cooled the resale market.

Looking Forward: The Big Picture

The housing market has been softening as affordability challenges persist. While outright price declines are seen in specific locales, most markets still show positive year-over-year growth. The key question now is whether this trend of increasing supply will continue, potentially leading to broader price drops.

Inventory and Price Correlation

Markets where inventory has normalized to pre-pandemic levels are generally experiencing slower or declining price growth. In contrast, markets still starved for inventory continue to see robust price increases. This dynamic underscores the importance of closely monitoring inventory trends to anticipate future market conditions.

Keywords: Home price momentum, active listings, months of supply, housing market trends, Florida housing market, inventory levels, pre-pandemic comparison, Sun Belt housing, Mountain West housing, affordability crisis, new construction impact.

Disclaimer: This information is for general knowledge and informational purposes only and does not constitute financial, investment, or other professional advice.

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