The February housing data from realtor.com finds sellers are increasingly adjusting to slower market conditions, as the share of homes with price reductions rose significantly. The national median home list price was down slightly compared to February 2024; however, more small homes are being listed, which decreased the median list price from last February. Adjusting for the composition of all available inventory, the price per square foot shows continued year-over-year growth.

Of particular significance is an increase in the number of home price reductions. This development suggests a market adjustment wherein sellers are adapting to evolving conditions. Consequently, further moderation in price appreciation may be anticipated. While interest rates remain at elevated levels, the prospect of lower listing prices could stimulate increased buyer participation this spring.

There continues to be a sustained increase in active listings. February marked the 16th consecutive month of annual growth. Additionally, new listings have risen, reaching their highest February level since 2021. This heightened seller activity indicates a response to prevailing market conditions. Although pending listings are still increasing, the rate of increase has slowed. This is most likely due to the current higher interest rate environment.

The average time homes spent on the market in February grew 8.2% to 66 days, which is 5 days more than in February 2024.

The forecast for 2025 indicates that home sales are expected to experience a slight increase. This increase will likely happen as the lock-in effect from high interest rates starts to fade. Increased inventory will support this increase in sales.

Overall, the US housing market is undergoing a period of adjustment characterized by increased price reductions and a growing inventory.