As the first quarter of 2025 wraps, the housing market continues to reflect the complexities of a broader economy in transition. National headlines suggest growth—home prices are still rising year-over-year, and sales volumes have picked up modestly—but a deeper look reveals underlying hesitations, particularly among older homeowners and prospective sellers.
Consumer Confidence Is Slipping, Despite a Resilient Economy
One of the most notable developments this year is the sharp drop in consumer expectations. The Conference Board reports that confidence levels have reached a 12-year low, driven by uncertainty around inflation, interest rates, and future financial well-being. This downturn in sentiment has also been reflected in equity markets, with the S&P 500 falling roughly 7% in the past five weeks.
While the Federal Reserve has acknowledged that survey-based sentiment doesn't always align with actual spending behavior, consumer caution matters—especially in housing, where long-term commitments and lifestyle decisions are involved. Combined with geopolitical instability and ongoing policy transitions, this uncertainty is causing many potential buyers and sellers to take a “wait and see” approach.
A Persistent Housing Shortage Continues to Shape the Market
The U.S. housing market still faces a major supply deficit—estimated at nearly 7 million homes—stemming from over a decade of underbuilding. While this shortage has supported high property values and strong equity gains for homeowners, it has also led to historically low inventory levels, limiting options for those who might otherwise be ready to move.
National inventory remains near a 25-year low, even after a small increase at the end of 2024. This environment leaves many homeowners in a difficult position: while they may want to downsize, relocate, or simplify, they’re discouraged by the lack of available homes that meet their needs.
This situation is especially pronounced in New England, where desirable lifestyle markets like the South Shore and Cape Cod have seen sharp home price increases since 2019, paired with steep drops in listings, sales activity, and days on market. The supply-demand imbalance has intensified even more in these areas due to aging populations and second-home demand.
Market Hesitation Among Older Homeowners
Demographic trends continue to influence market behavior. A significant portion of current homeowners—especially in New England—are older adults who have built up equity over time and often own their homes outright. While many of these individuals are ready for a lifestyle change, whether to be closer to family, reduce maintenance responsibilities, or access services, emotional ties to their longtime homes and limited replacement options often create paralysis.
This hesitancy creates a ripple effect. When older homeowners don’t sell, fewer move-up opportunities exist for younger families, and first-time buyers are squeezed further out of the market. The result is a bottleneck—one not caused by lack of demand, but by a scarcity of supply and a reluctance to transition.
Looking Ahead: Navigating a Cautious But Stable Market
Despite all of this, the outlook for 2025 remains fundamentally stable. The housing shortage continues to place a floor under prices, and buyers who are financially prepared remain active—particularly when properties are well-positioned and appropriately priced. The spring and summer markets are likely to bring renewed energy, but with continued emphasis on accuracy in pricing, presentation, and timing.
Ultimately, while the broader economic picture may feel mixed, the fundamentals of real estate—scarcity, location, and long-term utility—remain intact. Homeowners and investors who understand these dynamics and plan accordingly will be best positioned to make strategic decisions in the months ahead.
