Too Many Home Sellers, Fewer Buyers: Experts Predict Housing Prices To Fall In 2025 Without A Fed Put In Place

The U.S. housing market is tilting sharply in favor of buyers, with a record 33.7% more sellers than buyers, according to the latest data.

What Happened: This imbalance, the largest since 2013, is driving expectations of a 1% decline in home prices by year-end, as reported by Redfin.

With 1.9 million sellers compared to 1.5 million buyers, the market is experiencing its highest seller-to-buyer ratio since March 2020, fueled by high home prices, elevated mortgage rates, and easing "mortgage rate lock-in" effects.

Redfin's analysis highlights a stark buyer's market in 31 of the top 50 U.S. metros, with Miami, Florida, leading where sellers outnumber buyers nearly 3 to 1.

In contrast, Newark, New Jersey, remains the strongest seller's market, with home prices rising 12.2% year-over-year. Nationally, the median home sale price grew 1.6% to $431,931 in April, but Redfin predicts this growth will reverse as sellers compete for fewer buyers, expecting home prices to drop 1% by the end of the year as a result.

Bill Adams, Chief Economist at Comerica Bank, corroborates this trend, noting weaker-than-expected house price indices in April, with the S&P CoreLogic Case-Shiller 20-City Index falling 0.3% month-over-month.

Adams points to “anemic” existing home sales and rising listings in May, alongside declining consumer confidence in June, as signals of a cooling market.

Despite some Federal Reserve governors advocating for rate cuts, Chair Jerome Powell's "wait-and-see" stance suggests no immediate relief from high rates, which averaged 6.73% in April. “Comerica forecasts for the Fed to hold rates unchanged in the second half of 2025,” said Adams.

See Also: Mark Cuban Corrects Elizabeth Warren As She Slams JNJ, PFE For Higher Prices And Zero Taxes On Big Pharma: ‘PBMs Corrupt Healthcare’

Why It Matters: Apart from benchmark house price indexes being weaker than expected in April, “the listings-to-sales ratio was the highest since 2016,” pointed Adams, also adding that “jobs data point to less labor demand.”

These variables, combined with the Fed’s stance to keep holding rates, could affect the housing demand, thus dampening the prices.

Price Action: Here is a list of some real estate and housing exchange-traded funds that investors could consider as a play on the evolving housing demand.

<figure class="wp-block-table is-style-stripes">

</figure>

The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, rose on Tuesday. The SPY was up 1.10% at $606.78, while the QQQ advanced 1.53% to $539.78, according to Benzinga Pro data.

Read Next:

• BlackRock Bets Big On Defense Companies Amid Escalating Geopolitical Tensions: Palantir, Lockheed Martin, Northrop Grumman Among Stocks In Focus

Photo courtesy: Shutterstock

© 2020 Benzinga.com - Benzinga does not provide investment advice. All rights reserved.