Welcome to the March 2025 edition of The Full Measure, your guide to the housing economy tailored for real estate appraisers. The housing market is showing meaningful signs of movement after months of stagnation. February’s data reveals a market beginning to stir, though still constrained by affordability challenges.
I believe we’re witnessing a pivotal moment in the housing market’s post-pandemic evolution. The extraordinary conditions of 2021–2023 are gradually giving way to a more balanced market, though we’re still far from “normal” by historical standards. The gap between supply and demand continues to support price growth, even as affordability constraints limit sales recovery.
Market Performance: Sales and Inventory
Existing-home sales advanced 4.2% in February to a seasonally adjusted annual rate of 4.26 million, according to the National Association of REALTORS®. Single-family home sales showed strength, rising 5.7% to 3.89 million, while condominiums and co-ops declined 9.8% to 370,000 units. First-time buyers represented 31% of sales in February, up from 28% in January and 26% a year ago. This is encouraging, as first-time buyer participation had fallen to historic lows during the pandemic period.
New single-family home sales increased 1.8% to a rate of 676,000, up 5.1% from February 2024, according to data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Builders are strategically shifting toward more affordable offerings, with the median new home price at $414,500, down 1.5% from a year ago, and sales surging in the $300,000-$399,999 category.
Regional performance varied considerably. The West led existing sales with a 13.3% jump, the South saw a 4.4% increase, the Northeast decreased 2.0%, and the Midwest held steady. The South dominates new construction, accounting for 64.8% of new-home sales and showing a 12.4% year-to-date increase.
Total housing inventory reached 1.24 million units, up 5.1% from January and 17% year-over-year. This translates to 3.5 months of supply—below the 4.5-6 months considered balanced by industry standards. The inventory situation varies significantly between segments, with existing homes at 3.5 months while new homes have reached 8.9 months of supply (National Association of Home Builders).
I believe this bifurcated inventory situation creates distinct dynamics that appraisers must recognize. The abundance of new homes may pressure prices in that segment, while the shortage of existing homes supports appreciation in well-located properties.
Pricing and Financing Landscape
The median existing-home price reached $398,400 in February, up 3.8% year-over-year, marking the 20th consecutive month of increases (NAR). Regional price variations were significant: Northeast (+10.4%), Midwest (+5.8%), West (+3.6%), and South (+1.9%).
After peaking at 7.04% in January, the 30-year fixed-rate mortgage moderated to 6.65% by mid-March, according to Freddie Mac data. NAR forecasts rates will average 6.4% in 2025 and 6.1% in 2026, providing modest relief but remaining well above the ultra-low levels of 2020-2021.
I expect this “higher-for-longer” rate environment to continue reshaping the market. It will maintain the “mortgage rate lock-in effect,” sustain the shift toward affordable housing options, and potentially increase alternative financing arrangements.
Consumer confidence has fallen to 92.9 in March—the lowest since February 2021, with the Expectation Index below the recession-signal threshold for two consecutive months. Despite this, the share of respondents planning to buy a home rose slightly to 5.4%.
Implications for Appraisers
For appraisers, the current environment demands a hyper-local approach to valuation. National and regional trends provide context, but accurate valuations require understanding specific local market dynamics.
I’ve found that maintaining detailed neighborhood-level databases has become increasingly valuable. Tracking metrics like days on market, list-to-sale price ratios, and inventory levels can reveal trends obscured in broader data.
The divergent trends between existing and new home markets require careful comparable selection. Builders’ shift toward affordability has created situations where new homes may sell for less than comparable existing properties, reversing the traditional premium.
The continued price appreciation necessitates thoughtful approaches to time adjustments, calibrated to reflect local market conditions rather than national averages.
Outlook and Conclusion
NAR forecasts existing-home sales will rise by 6% in 2025 with the national median price increasing by 3%. These projections suggest a market that is gradually healing but still facing challenges.
I believe we’re witnessing adaptation to a new normal—characterized by higher but stable mortgage rates, modest but persistent price appreciation, and increasingly divergent regional performance. This environment rewards appraisers who combine technological efficiency with deep market knowledge.
As we move deeper into spring, the market will likely continue its gradual improvement, though the path will be uneven with significant regional variations and sensitivity to mortgage rates. For appraisers, staying attuned to these evolving dynamics remains crucial for delivering accurate valuations in this transitioning market.
McKissock’s appraisal continuing education courses are a great way to sharpen your skills and stay up-to-date on all your CE requirements.
