Housing market inventory offers a hint of what’s to come

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Total active U.S. housing inventory for sale recently fell by 42,133 homes, from 871,509 in December 2024 to 829,376 in January 2025, according to the latest Realtor.com data.

Historically, national active inventory usually declines during this seasonal month-over-month window, with the average decline since 2017 being -69,646 between December and January.

The fact that inventory is rising year-over-year, combined with January’s smallest inventory decline for the month since Realtor.com began publishing data in summer 2016, strongly suggests that national active housing inventory for sale is likely to end the year higher.

Heading into 2025, the average forecast model tracked by ResiClub projected U.S. active inventory for sale to increase by 12.5% in 2025. Through the end of January 2025, active inventory is growing at a rate of 25% on a year-over-year basis.

In markets that maintain this (or greater) level of inventory growth, homebuyers will gain more leverage and power. Some markets that are sellers markets could become balanced markets, and some markets that are balanced markets could become buyers markets. 

Historically speaking, national active inventory usually begins its seasonal decline around August, and then begins to rise again around March. (Note: The seasonal cycle for new listings is a little different; it usually begins to rise around January and tops out around June.)

While national active inventory is rising (+25% on a year-over-year basis), national active inventory at the end of January 2025 (829,376) was still 25% below pre-pandemic January 2019 levels (1,110,636). 

And that story varies a lot by market. The Northeast and Midwest remain fairly tight, while the Gulf region has softened.

Generally speaking, housing markets where inventory (i.e., active listings) has returned to pre-pandemic levels have experienced weaker home price growth (or outright declines) over the past 30 months. Conversely, housing markets where inventory remains far below pre-pandemic levels have generally experienced stronger home price growth over the past 30 months.

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