What’s Really Driving Home Prices in Today’s Market

You've probably heard that home prices are cooling off. And that's true — nationally. But when you zoom in on individual markets across the country, the picture looks completely different depending on where you are. Some areas are still seeing solid price growth, others have gone flat, and a few have actually dipped slightly negative. So, what’s causing all of that variation?

It All Comes Down to Inventory

Here’s the simple version: when there are more homes for sale, buyers have more options. More options mean less competition, and less competition means sellers have less ability to push prices higher. On the flip side, when inventory is tight, buyers are competing over a smaller pool of homes, and that competition pushes prices up.

That dynamic is playing out in a very visible way across the country right now. Markets where inventory has climbed back to, or above, normal pre-pandemic levels are seeing prices flatten or fall slightly, while markets where inventory is still well below those 2019 benchmarks are continuing to see prices rise. As Lance Lambert, CEO of ResiClub, puts it:

"Home prices are still climbing a little year-over-year in many regions where active inventory remains well below pre-pandemic 2019 levels, such as pockets of the Northeast and Midwest.

In contrast, some pockets in states like Texas, Florida, and Colorado — where active inventory exceeds pre-pandemic 2019 levels by a solid clip — are seeing modest home price pullbacks or flat pricing."

The Maps Say It All

Take a look at where inventory stands today compared to 2019. In most places (the states in gray below), inventory still falls short of where we were back then. And that’s exactly why prices are continuing to climb, even if only moderately, in the vast majority of states.

But you’re probably more interested in where prices are falling slightly, since that’s what is making headlines. So, let’s look at how much inventory is affecting prices in those areas.

According to Realtor.com, 15 states and Washington, D.C. are now back above pre-pandemic inventory levels, and some by a wide margin (shown in orange on the map below):



Now, let’s look at the latest Federal Housing Finance Agency (FHFA) data to see what has happened to home prices in those same states over the past year (again, focus on the orange areas in the next map).

See how closely those areas line up with the places seeing more homes for sale today? That overlap is not a coincidence. It’s cause and effect.



The national average of 1.7% price growth is accurate, but it represents two very different stories happening at the same time: the smaller number of areas experiencing mild declines and the overwhelming majority of markets where prices are still rising.

What This Means If You’re Buying or Selling

If you’re a buyer, the market you’re shopping in matters a lot right now. In places like Texas, Colorado, or Florida, you may have more negotiating power with more choices, less competition, and sellers who are more motivated to make a deal. In tighter markets like much of the Northeast, buyers are still likely facing a lot of competition.

If you’re a seller, pricing strategy is everything. In markets where inventory has risen, overpricing is one of the fastest ways to linger on the market and eventually sell for less than you would have with the right price from day one. In markets where inventory is still low, you’re in a strong position, but getting your price right still matters if you want to attract serious buyers quickly. Either way, that’s where a local real estate agent earns their keep.

Bottom Line

When it comes to home prices, where you are matters more than ever right now. The national housing market tells only part of the story — a local real estate agent is the best person to help you understand what’s happening in your specific market and make sense of what it means for your buying or selling decisions.