Housing Market 2025 — Inventory Surges, Buyers Still Can’t Afford Homes

In today's video, I want to give you housing market updates on prices, mortgage interest rates, and what's to come. So let's get started with this. So housing inventory is surging across the US. So of course, a lot of it depends on your location, but I want to show you this. So there are currently over 2 million homes available for sale in the US. 12 months ago, which I've circled in red, it was at 1.87 million. So compared to last year, housing inventory is up by 8%. And homes are sitting on the market for longer. So right now, they're on the market for 43 days. So that's the median. 12 months ago, homes were on the market for 35 days. So the situation is that with these high prices and relatively higher mortgage interest rates, homes are just not moving. So there are fewer sellers, and there are even fewer buyers. Because of course, the situation still remains so unaffordable. So here are the states where inventory is up the most. At number 10, you have New Mexico. Year over year, inventory is up by 31%. Number 9, Washington. Inventory is up by 32%. Number 8, Virginia, up 34%. Number 7, South Dakota, 36%. 6, Colorado, up 36%. 5, Arizona, 36%. 4, California, 37%. 3, North Carolina, 41%. Number 2 is Maryland at 48%. And number 1, you have Nevada, where inventory is up 53% compared to last year. Okay, but here's the crazy thing. Even though inventory is piling up, home prices nationally are not going down. Compared to 12 months ago, which are circled in red, home prices are up by 1.4%. So this is all just supply and demand. Yes, there are fewer buyers, but there are fewer sellers as well. And we're still going through a housing shortage. So is the housing market crashing? The answer is no. In the last housing market crash, home prices went down by 29% nationally. And right now, again, home prices are up by 1.4%. And last month, they actually hit a record high. But listen, I just want to tell you this. If home prices are falling in your area, then I completely believe you. They're falling in 35% of the country. However, in 65% of the country, home prices are either staying the same or even going up. And when you average it out nationally, home prices are up by 1.4%. Okay, so home prices are down in Austin, Miami, Chicago, LA, Denver, and others. However, I mean, you take a look for yourself. They're not crashing. Down 4.9% in Austin compared to last year, down 4.7% in Miami, down 4.4% in my city of Chicago. But listen, they're falling 4%, 3% in these specific cities from unbelievably high prices. And as they go down 4%, 3%, 2% from those levels, you know, of course that helps, but it still remains unaffordable for millions of people. Okay, so maybe there's going to be relief next year or maybe not. So here's what the institutions are predicting about home prices for the remainder of 2025 and for 2026 as well. So Fannie Mae predicts that we'll end this year with home prices being up 4.1%. So that's 2025 in total from the start of the year to the end of the year. The Mortgage Bankers Association predicts that we're going to end the year with home prices up 1.3%. The National Association of Realtors predicts that we're going to end the year with home prices being up by 3%. And here are the predictions for next year, 2026. Fannie Mae predicts that home prices are going to go up by 2%. Mortgage Bankers Association says up by 0.3%. So pretty much flat. National Association of Realtors says up 4%. Okay, so if you've been hoping for a housing market crash since like 2021, you may be disappointed again for another year. Now let's take a look at the mortgage interest rates. So this is a five-year chart of the average 30-year fixed coming from the, so this is from the Federal Reserve. So it's actually been, I mean take a look, it's been trending downward and the average 30-year fix is currently at 6.6%. Now I want to show you something very interesting. So the Federal Reserve has their next meeting on September 17th. And according to market expectations, so this is coming from the CME FedWatch tool, there is a 100% chance of the Federal Reserve cutting interest rates at that meeting. And Treasury Secretary Scott Besant is voicing his opinion that the Federal Reserve should cut interest rates by large amounts, not by just 0.25%. So that's why there's a 93.3% chance that the Federal Reserve will cut interest rates by 0.25% in September. But now there's also a 6.7% chance that the Federal Reserve will cut interest rates by 0.5% in September. And again, there's a 0% chance, this is according to market expectations, that the Federal Reserve will keep interest rates where they are. Okay, but here's the thing, those odds that you just saw were as of yesterday, on Wednesday. So this morning, on Thursday, August 14th, the producer price index came in hot, and that changed the situation. Okay, so here are the most recent odds as of this Thursday morning. Now the odds of a 0.5% interest rate cut in September have gone to 0%. The odds of a 0.25% rate cut have gone to 92.5%. And the odds that the Federal Reserve will not cut interest rates in September have gone to 7.5%. Okay, so the odds are still heavily in favor of a September rate cut. But believe it or not, the Federal Reserve, as recently as yesterday, is saying that they may not cut interest rates in September. And when Jay Powell, Chair of the Federal Reserve, I mean, when he sees this, like the market expectations, I mean, he may not care, he may not be influenced, and he may say that we need more data, and we're going to take a wait-and-see approach for even longer. And again, he may not cut. But I guess, I mean, we'll see at the September meeting. But listen, this is so important because the Federal Reserve has influence over the interest rate on the 10-year yield. So they may have minimal influence on the 30-year yield, but mortgage interest rates are correlated to the 10-year. So relatively soon, if not in September, the Federal Reserve will resume their interest rate cutting cycle, which started last year, but of course it was paused for this year. So I don't expect mortgage interest rates to go down to 3% again next year, you know, of course, unless the Federal Reserve is forced to do something outrageous and like buy 10-year notes and drive down interest rates. But I mean, that would be a situation, like an emergency situation, and that would, if that were to happen, that would be most likely stemming from something outside the housing markets. But listen, I just want to tell you this, like this is some food for thought. So with these relatively higher mortgage interest rates that we have right now, home prices have not gone down. Home prices hit a record high the previous month. So just imagine what would happen to home prices if mortgage interest rates went down significantly. So in that case, there would be more buyers, and that would drive up demand, and that would either support home prices or drive them up even further. So I'm telling you, and a lot of people are aware of this, that there's no easy fix to the situation of home unaffordability. And here's another possibility. So mortgage interest rates are correlated to the 10-year treasury yield, right? So yes, the Federal Reserve does have influence over it, you know, to what degree? It depends on the degree of involvement by the Federal Reserve. However, if there's weakness in the bond market, then that's going to affect the 10-year treasury yield as well. So if the bond market starts to do poorly, and interest rates on the 10-year notes, if they increase, then mortgage rates can increase. So what I'm saying is that there is a possibility that mortgage interest rates do not go down, or they even go up in 2026. So it depends on the bond markets, and it depends on the Federal Reserve. So I'll just say that right now, nobody can say with certainty, you know, with absolute certainty, what's going to happen with home prices or mortgage interest rates in 2026. Like that's the honest truth. And another development in current events is that the U.S. government is exploring plans to release Fannie Mae and Freddie Mac from government control. So essentially, the government is thinking about IPO-ing them to raise money for the government. But if they do that, there's going to be consequences. Under government control, and the government's implicit guarantee, we get lower mortgage interest rates. But if those entities go private, then that backing is going to be gone. And that could trigger higher mortgage interest rates. So some analysts are saying that average mortgage interest rates could go up by 1% in this type of event. So of course, the government is aware of this. So they're proposing a hybrid model to minimize any consequences. Okay, so that is your housing market updates. There has not been a housing market crash. Homes still remain unaffordable for millions of Americans. And just think about what we covered. There's just so many variables that I'm telling you that 2026 is just, it's looking so unpredictable. That's just my honest opinion. But I'll keep you updated. I'll just keep you posted on how this all develops. Thank you so much. Please subscribe. And I wish you a very nice day.