Market conditions favor buyers as asking prices stretch beyond affordability
Home price appreciation in the US continued to slow, and a growing disconnect between what sellers want and what buyers are willing to pay is widening the gap across the housing market.
Federal Housing Finance Agency (FHFA) data showed that US house prices rose just 0.1% in February, according to its seasonally adjusted monthly House Price Index (FHFA HPI®). On an annual basis, prices were up 3.9% from February 2024 to February 2025. The previously reported 0.2% gain in January was revised upward to 0.3%.
The S&P CoreLogic Case-Shiller US National Home Price NSA Index echoed the FHFA’s findings, showing a 3.9% annual return in February, slightly lower than the 4.1% gain in January. The 10-City and 20-City Composites also showed cooling price momentum, with annual increases of 5.2% and 4.5%, respectively. For context, those were down from 5.4% and 4.7% the previous month.
Month-over-month, the pre-seasonally adjusted Case-Shiller national index rose 0.4%, while the 10-City and 20-City Composites were up 0.8% and 0.7%, respectively. After seasonal adjustment, those gains softened to 0.3% nationally, 0.5% in the 10-City, and 0.4% in the 20-City Composite.
What’s emerging is a market that’s increasingly tilted toward buyers. Sellers who entered the market with record-high price expectations are finding fewer takers and are being forced to offer concessions or cut prices to stay competitive. The combination of rising inventory, slower price growth, and a growing pricing gap underscores a market recalibration already underway.
According to Redfin’s latest data, the typical home for sale in March was listed for $469,729, while the typical sale closed at $431,057—a difference of $38,672, or 9%, the largest spread since the early days of the pandemic in May 2020.
“Homebuyers today have the upper hand because they’re outnumbered by sellers, and that’s a tough pill for sellers to swallow,” said Redfin senior economist Elijah de la Campa. “When buyers and sellers are on different planets, one side eventually has to give in, and it’s looking like it’s going to be sellers this time.
“Rising inventory, price drops and seller concessions indicate this is already starting to happen, and sale-price growth will likely continue to slow as a result.”
The pricing disconnect comes as sellers continue to anchor their expectations to last year’s market highs, while buyers, constrained by elevated mortgage rates and affordability concerns, refuse to stretch beyond their limits. Many homeowners listing now bought at or near the 2021–2022 market peak and are pricing aggressively in an attempt to recoup their investments.
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Unlike the competitive, fast-rising market of 2020, where list and sale prices were both surging, today’s divergence is driven by list prices accelerating while sale prices cool. Redfin’s March data showed median list prices up 6.2% year over year, the sharpest increase since September 2022. Meanwhile, median sale prices rose just 2.5%, the slowest annual gain since September 2023.
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