If you’ve been trying to buy a home, you’ve likely noticed how competitive the market is. High prices, limited inventory, and bidding wars have made it challenging for many buyers. But will this intense competition and high demand ever subside? Let’s explore the current trends and what they mean for the future.
Housing inventory remains tight
One of the main drivers of competition is the limited number of homes for sale. In April 2025, housing inventory was up over 30% year-over-year, marking the 18th consecutive month of supply growth. However, this increase is still not enough to meet the demand, as the U.S. is estimated to be short by 4.5 million homes.
Mortgage rates impact affordability
Mortgage rates play a significant role in housing demand. As of April 2025, the average 30-year mortgage rate was 6.71%. While this is lower than the peak rates seen in 2023, it’s still higher than the rates many buyers experienced in the past. This affects affordability, especially for first-time homebuyers.
Regional variations in demand
Not all markets are experiencing the same level of competition. For instance, Buffalo, New York, has been identified as the hottest housing market for 2025, driven by high demand and limited supply. Conversely, cities like San Francisco and Austin are seeing a slowdown in demand, leading to more balanced market conditions. z
Long-term outlook
Looking ahead, experts predict a moderation in price growth. Fannie Mae forecasts home prices to rise by 4.1% in 2025, while the Mortgage Bankers Association expects a more modest 1.3% increase. This suggests that while prices may continue to rise, the rapid increases seen in previous years may slow down.
While the real estate market remains competitive, signs indicate that the intensity may lessen over time. Increased inventory, stabilized mortgage rates, and regional shifts in demand could lead to more balanced market conditions in the future.