After years of unprecedented volatility and record-low inventory, the U.S. housing market is finally showing signs of sustained normalization. According to the July 2025 Monthly Housing Market Trends Report from Realtor.com, active home listings jumped 24.8 percent year-over-year—the 21st consecutive month of inventory growth. For the third month in a row, there are now over one million active home listings nationwide, a threshold not consistently reached since the early days of the COVID-19 pandemic.
While this trend reflects a much-needed correction in market dynamics, total active listings are still 13.4 percent below the pre-pandemic average, highlighting the persistent gap between current supply and historical norms. Nonetheless, the upward trajectory is providing welcome relief for buyers after years of scarcity, frenzied bidding wars, and skyrocketing prices.
Several key indicators point to a cooling pace in home transactions. The median number of days homes spend on the market has increased to 58, a full week longer than this time last year and five days longer than the previous month. This shift suggests that buyers now have more time to weigh options, negotiate terms, and potentially secure better deals.
Prices, meanwhile, have shown modest movement. The national median list price rose just 0.5 percent year-over-year in July, reaching $439,450. Price per square foot has followed a similar trajectory. Interestingly, despite rising inventory levels, price cuts are not accelerating. In fact, the share of listings with price reductions dropped slightly to 20.6 percent—indicating that sellers are adjusting to new conditions but not yet under heavy pressure to slash asking prices.
Regionally, the rebound in housing inventory is not evenly distributed. Some metro areas are experiencing a rapid return to pre-pandemic norms or even exceeding them. For instance, Denver saw its active listings double compared to earlier years. Austin, Seattle, and Phoenix also posted significant gains in inventory. In total, 22 of the nation’s 50 largest metropolitan areas now have more active listings than they did in early 2020, before the pandemic-fueled housing boom began.
For buyers, the implications are substantial. The combination of increased options and less frenzied competition offers a more balanced and manageable home shopping experience. First-time homebuyers, in particular, may find better conditions for entering the market—though many still face significant challenges, particularly related to affordability.
Mortgage rates remain elevated, hovering near recent highs despite softening inflationary pressure. For many households, this has created a paradox: more homes are available, but financing them remains expensive. Monthly payments for median-priced homes are still out of reach for large segments of the population, especially in high-cost urban areas. As a result, demand continues to be strongest among dual-income and cash-ready buyers.
For realtors and sellers, the shifting dynamics mean that strategic pricing, home staging, and marketing are becoming more crucial than ever. In contrast to the overheated conditions of 2021 and 2022, where homes routinely sold above asking within days, today’s sellers must compete for attention in a growing pool of options. Sellers who price realistically and invest in curb appeal and interior presentation are more likely to capture buyer interest.
Beyond the transactional implications, the July report may mark the beginning of a longer-term rebalancing in the housing market—one shaped by post-pandemic economic realignments, demographic shifts, and evolving consumer behavior. Builders, investors, and policymakers will be watching closely to see if the inventory growth sustains into the fall and winter months, which traditionally see a slowdown in activity.
As the housing market enters this next phase, the overall picture is one of cautious optimism. Inventory is finally expanding. Price growth is moderating. Buyers are gaining leverage. Yet the affordability crisis remains unresolved, and future interest rate decisions by the Federal Reserve will continue to shape the path ahead.
For now, though, the U.S. housing market is finally offering a little more room to breathe—for buyers, sellers, and everyone in between.
Read Also: https://toplistings.com/u-s-housing-market-shifts-in-favor-of-buyers/
