Housing Market Braces for Prolonged Downturn as Prices Fall, Supply Rises
world-today-news.com – June 29, 2025
Key Takeaway: The U.S.housing market is showing increasing signs of a sustained downturn, with home prices experiencing consecutive monthly declines alongside a surge in housing supply and stubbornly high mortgage rates. Experts warn this could signal a “deeper correction” ahead.
[WASHINGTON D.C.] – After a period of stagnation following rapid interest rate hikes, the housing market is now facing a potential prolonged slump. Recent data reveals a concerning trend: home prices are falling, while the number of homes available for sale is climbing, all against a backdrop of mortgage rates hovering around 7%.The latest Case-Shiller home price report indicates a 0.3% monthly fall in the 20-city index in April – a steeper decline than the previously reported 0.2% dip in March. This back-to-back decrease has prompted economists at Capital Economics to warn of a “deeper correction” [[1]].
“After falling in March, the further 0.3% m/m decline in house prices in April raises the risk that prices are entering a sustained downturn, as the market finally buckles under the weight of near-7% mortgage rates,” stated Thomas Ryan, North America economist at Capital Economics.Further reinforcing this trend, the FHFA price index also showed a 0.4% monthly drop.On a three-month annualized basis, house prices have fallen by 0.4%,marking the slowest year-over-year pace since August 2023.
Demand Weakness & Rising Inventory
The downturn is fueled by anemic demand due to high borrowing costs and a growing inventory of homes for sale,now back to pre-pandemic levels. This shift is forcing sellers to adjust their price expectations. The median sale price of existing homes has now dropped for five consecutive months on a seasonally adjusted basis [[1]].
Global Context & Future Outlook
While this report focuses on the U.S. market, global housing affordability remains a significant challenge