What’s Happening in the 2025 Housing Market?

Lower mortgage rates are sparking renewed buyer interest, keeping the real estate market active and steady this year.

Are real estate prices finally dropping in 2025? I’ve had quite a few conversations kick off with that same question lately, which shows how people believe the real estate market is cooling off. But what do the numbers really tell? Let’s break down what’s happening in the 2025 real estate market and how it compares to last year.

A strong start to the year. 2025 began with more optimism than 2024. Most economists predicted price increases and slightly higher home sales compared to last year. But while the year started strong, one of the most surprising things about 2025 has been the timing of the market’s seasonal peak.

The peak came early this year. Typically,  the spring market hits its peak sometime between the end of April and mid-May when pending sales—or the number of buyers in escrow—usually top out. In 2023, we hit the peak in mid-May. In 2024, it was a little earlier, around April 25. But in 2025, we saw that peak happen way earlier—on March 27.

This development offers insights into buyer behavior. When buyers pull back early, it usually means something shifted in the market.

“As interest rates continue to drop, we’re seeing more homebuyers come back to the market.”

The mortgage rate roller coaster. Between the end of March and the start of April, mortgage rates were all over the place. They dropped sharply for just one day, then quickly jumped back up to over 7%. This caused a lot of buyers to hesitate, but thankfully, things have settled down since then. Right now, the average rate for a 30-year mortgage is 6.82%, and as rates continue to drop, we’re seeing more home buyers entering the market.

Another big shift in 2025: Inventory. Currently, there are 70% more listings than we had a year ago. That sounds like a lot, but when you look at the actual numbers, it’s not really alarming. All of Orange County currently has just over 4,000 active listings, which would have been considered a low number before the pandemic. So, while inventory is up by a percentage, we’re still at historically low levels. Sales aren’t dropping—they’re just happening at a slower pace than before.

If you’re thinking about making a move in today’s market, you have to know how to use the current conditions to your advantage. Buyer behavior, market timing, and interest rates are all shifting, and staying informed can make a big difference. Don’t hesitate to give me a call at (949) 835-4713 or send an email to simon@sellwiththerightguy.com if you have any questions.  Let’s talk strategy and figure out how you can win in real estate this year.