Housing Market 2025: Will Inventory Finally Loosen?
- Alexi Mencio
- Oct 7
- 2 min read
For years, low housing inventory has been one of the biggest challenges in the real estate market. With a shortage of homes available and a high number of buyers competing, prices surged to record highs. Even in 2024, many buyers continued to face bidding wars, limited choices, and struggles with affordability.
But now, as we move through 2025, the question on everyone’s mind is: Will inventory finally loosen?
At Trust Lending, we track these trends closely to help borrowers and brokers navigate today’s market. Here’s a look at what’s happening with supply, what’s driving changes, and how it could affect buyers this year.
Why Inventory Has Stayed Tight
Several factors have kept existing home inventory low:
Locked-in homeowners — Millions of homeowners refinanced into 2–3% mortgage rates during the pandemic. With current rates still above 6%, many are staying put.
Affordability pressures — Rising insurance costs, higher taxes, and limited wage growth discourage some sellers from upgrading.
Aging in place — Older homeowners are holding on to properties longer, reducing turnover.
Investor ownership — Institutional investors and short-term rental buyers hold a significant share of homes off the market.
Signs That Supply Could Improve in 2025
Despite the headwinds, there are signals that more homes could become available:
New Construction Growth
Builders are responding with higher levels of new home construction. Incentives like rate buydowns and design credits are helping buyers step into these homes.
Gradual Rate Cuts
The Federal Reserve’s recent 0.25% cut — and potential future cuts — may encourage some homeowners to move, loosening existing home supply.
Distressed Sales & Affordability Stress
As affordability challenges rise, more homeowners may list properties to avoid financial strain, particularly in higher-cost markets.
Regional Shifts
Sunbelt states continue to see migration, while other regions may experience slower demand, leading to more balanced supply levels.
What This Means for Buyers
If inventory begins to loosen in 2025, buyers may finally see:
More choices — reducing the pressure of bidding wars.
Stabilizing home prices — though unlikely to drop dramatically, growth could moderate.
Better negotiation power — buyers may gain leverage on repairs and concessions.
However, increased inventory doesn’t solve all affordability issues. Mortgage rates, insurance costs, and property taxes remain key factors.
What This Means for Brokers and Lenders
For brokers and loan officers, changing inventory creates opportunities:
More transactions: A healthier supply means more deals to finance.
Educated buyers: Many buyers have been waiting on the sidelines — now is the time to bring them back into the pipeline.
Flexible financing: Rate buydowns, down payment assistance, and Non-QM loans can help buyers adapt to current conditions.
2025 May Bring Relief, But Caution Remains
The housing market in 2025 shows early signs that inventory could improve, thanks to new construction and gradual policy shifts. While challenges remain, a more balanced market would benefit both buyers and lenders.
At Trust Lending, we’re here to help borrowers and brokers take advantage of opportunities as supply shifts — from first-time homebuyers to seasoned investors.
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