The Housing Market Isn’t Crashing — But It Is Losing Altitude
Dec 12, 2025 · news
Housing headlines tend to live at the extremes. Either the market is “surprisingly resilient,” or a crash is supposedly right around the corner. Both narratives miss what the data is quietly showing.
The housing market is not collapsing. But it is losing altitude. And historically, this phase is where risk returns long before the headlines catch up.
Market downturns rarely begin with sudden price drops. They start with subtle shifts that weaken momentum: rising inventory, longer listing times, and an increase in price reductions. Those signals are already present across many U.S. regions.
Inventory Is Rising Faster Than Demand
According to Realtor.com’s monthly housing market reports, active listings have been increasing year over year for more than two consecutive years. While inventory remains below pre-pandemic levels in some metros, the trend is clear: supply pressure is building.
At the same time, data from the National Association of Realtors shows pending home sales remain historically weak compared to pre-2020 norms. When inventory grows faster than demand, sellers lose pricing power even if headline prices appear stable.
Key takeaway:
Price stability does not equal market strength. In housing, leverage shifts well before prices visibly decline.
Median Prices Are Hiding Early Weakness
Median home prices are often the last metric to reflect stress. They can remain flat or even rise while the underlying market weakens, especially when higher-end homes continue to transact and lower-end listings fail to sell.
What moves first are price cuts and concessions. Realtor.com data shows the share of listings with price reductions has been trending upward across many metros, particularly in markets that experienced rapid growth from 2020 through 2022.
- More frequent price reductions
- Longer days on market
- Rising seller concessions
- Deals falling through before closing
Why Indiana and Texas Matter Right Now
Indiana and Texas are not weak markets. They are early signal markets. Both states absorbed massive population inflows, aggressive new construction, and significant investor activity during the pandemic housing boom.
As affordability tightens and demand normalizes, these markets are often the first to show surplus. In several Indiana metros, an increasing share of homes are seeing year-over-year value declines. In parts of Texas, new construction is competing directly with resale listings, putting pressure on prices.
This isn’t a crash signal.
It’s a normalization signal. Markets with flexible supply and heavy investor participation tend to roll over before more constrained regions.
What Buyers, Sellers, and Investors Should Do Now
The most dangerous mistake in this phase is assuming the past three years represent a normal baseline. They do not. This is a transition period, and it rewards caution and data-driven decisions.
- Buyers should focus on price cuts, not list prices
- Sellers should expect competition and longer timelines
- Investors should underwrite conservatively and stress-test assumptions
- All parties should analyze neighborhoods, not just metro averages
The housing market is not falling off a cliff. It is cresting. And recognizing that shift early is often the difference between reacting late and moving strategically.