Home prices are falling: U.S. inventory hits five year high

Thinking about buying a house? Here’s some news you can use. The housing market is shifting. And it could mean more choices and better prices for you.

More Houses, Fewer Buyers: A Recipe for Deals?

Remember trying to find that one toy during the holidays? Empty shelves, right? Well, the housing market was like that for a while. Not anymore.

The number of homes for sale in the U. S. has jumped to a five-year high. That’s according to Redfin. We’re talking about over 1. 79 million homes on the market. A big jump, like 12. 9% more than last year.

Why the change? More sellers are putting their homes on the market. But fewer people are buying. More cookies on the plate, but fewer people grabbing them.

Why Are Homeowners Selling Now?

Homeowners waited. And waited. Hoping for lower mortgage rates. Rates that just didn’t come.

Now? They’re jumping in. Even if it means giving up those sweet, low mortgage rates they already have. About 17% of homeowners have mortgages over 6%. The highest since 2016.

Buyers Still Hesitant

But those lower rates are a distant memory. And buyers are still on the sidelines. The typical home sat on the market for 56 days last month. That’s the longest wait for any January in five years.

Sales are down too. Pending home sales hit the lowest level since 2012. And a lot of deals are falling apart. Around 41,000 agreed purchases were canceled.

Why the Cold Feet?

Two big reasons: High mortgage rates. High prices.

Mortgage rates topped 7. 04% last month. And the median home price? $418,581. Up 4. 1% from last year.

It’s a tough combo. Like trying to run a race with weights on your ankles.

What Are People Saying?

Fannie Mae surveys consumers every month. And people are worried about affordability.

“Consumers seem increasingly pessimistic,” says Kim Betancourt, VP at Fannie Mae. They think home prices, rent prices, and mortgage rates will all go up.

Redfin also points to “macro uncertainty. ” Things like tariffs, layoffs, and return-to-office mandates are making buyers nervous.

The Good News: Price Drops

With fewer buyers, prices are dropping. The typical U. S. home is selling 1. 8% below its asking price. The biggest cut in almost two years.

Some areas are seeing even bigger drops. In Florida, homes are selling around 5% below asking price.

What Does It All Mean for You?

If you’re buying, now might be a good time to look. More choices. Lower prices. It’s like finding a sale at your favorite store.

Do your homework. Talk to a real estate agent. And be prepared to negotiate. You might just get the deal of your dreams.