In the closing weeks of 2025, the U.S. housing market exhibited a notable shift, as home sellers pulled back, even as overall affordability reached its highest point in three years, according to Zillow. The company’s December report highlights a seasonal cooldown, following an unusually active fall, illustrating how traditional patterns are reasserting themselves amid broader market improvements.
Seasonality Played A Significant Role
After lower mortgage rates in September and October spurred heightened activity among both buyers and sellers, November brought a sharp decline in new listings. Sellers stepped back, with fresh inventory falling nearly 30% from October to November, marking the largest November drop since at least 2018, returning listing activity to long-established seasonal norms. This pullback reversed earlier annual gains in new listings, moving from a 5.1% year-over-year increase in October to a 4.4% annual decline in November.
Price Adjustments By Sellers Normalized
In October, roughly 26.9% of listings carried price cuts — near record levels — but by November, that figure had fallen to about 21.2%, aligning with typical seasonal patterns. Observers interpret this as signs that sellers are opting to await spring demand rather than lowering prices in the current winter market.
And despite the slowdown in listing activity, several positive trends emerged for prospective buyers over the course of 2025. Mortgage payments as a share of median household income declined to 32.6% in November — the lowest level since 2022 — as downward pressure on mortgage rates combined with rising household incomes. This improvement reduced monthly payment burdens by more than $100 for the typical buyer, narrowing affordability challenges that have dogged the market for years.
Inventory Conditions Improved
Throughout the year, inventory increased and the longstanding deficit relative to pre-pandemic levels narrowed, giving buyers greater choice and leverage. Buyers gained additional ground as inventory expanded faster than demand in several markets earlier in the year.
What Lies Ahead?
Zillow economists expect the housing market to regain momentum in spring 2026, as seasonal activity returns and mortgage rates continue a modest downward trend. For now, however, the winter slowdown — combined with sellers’ reluctance to list at year’s end — signals a temporary pause in market dynamism, despite affordability strides.
