Home Sellers Are Setting ‘Aspirational’ Prices. Buyers Have Other Ideas.

For-sale inventory is rising nationwide, but sales aren't keeping up and price reductions are common.

By Steven Orlowski, CFP, CNPR

As the U.S. housing market enters a new phase in 2025, an interesting disconnect is taking shape between sellers and buyers. Motivated by memories of the pandemic-fueled housing boom, many home sellers are listing their properties at “aspirational” prices—figures based more on hope than on current market realities. But buyers, facing high mortgage rates and economic uncertainty, are pushing back. The result? A surge in price reductions and slower home sales across much of the country.

Inventory Is Up—But Closings Lag Behind

After years of tight supply, for-sale inventory is finally rebounding. According to data from Redfin and Zillow, active listings have increased year-over-year in most metro areas. More homeowners, lured by the potential for profit or a need to relocate, are putting their homes on the market.

But the uptick in listings isn’t translating to a corresponding rise in sales. Pending home sales remain sluggish, and many properties are sitting longer than they did just a year ago. Experts say the reason is clear: prices are out of sync with buyer expectations.

“Sellers are pricing homes as if it’s still 2021,” says Danielle Hale, chief economist at Realtor.com. “But today’s buyers are far more price-sensitive, especially with mortgage rates hovering around 7%.”

The Price Reduction Phenomenon

The clearest sign of this tension is the spike in price cuts. In markets like Phoenix, Austin, and Boise—where prices soared during the pandemic—more than 30% of listings have undergone at least one price reduction in recent months.

Even traditionally steady markets are seeing sellers adjust expectations. Nationally, about one in four homes for sale had a price drop in April, according to Zillow. That figure is expected to climb heading into the summer months.

“In many areas, we’re seeing buyers wait it out, assuming prices will come down,” says Nadia Evangelou, senior economist with the National Association of Realtors. “That’s creating a standoff that’s cooling the market.”

Buyers Are More Selective—And Empowered

High borrowing costs are just one reason buyers are more cautious. Inflation, rising insurance premiums, and economic uncertainty have many would-be homeowners thinking twice about stretching their budgets. The days of all-cash offers and bidding wars may not be entirely over, but they’re no longer the norm.

Buyers now have more leverage than they’ve had in years. They’re negotiating harder, requesting repairs, and walking away if the price doesn’t feel right. Many are targeting homes that have been on the market for weeks, banking on the possibility of a discount.

“Sellers can ask whatever they want,” says Jessica Lautz, deputy chief economist at NAR. “But it doesn’t mean they’re going to get it.”

What This Means for the Market

The disconnect between sellers’ hopes and buyers’ realities could define the 2025 housing market. For now, economists don’t expect a dramatic drop in prices—demand remains strong in many areas, and inventory, while rising, is still below pre-pandemic levels. But the era of automatic appreciation may be over, at least for now.

Experts advise sellers to get real about pricing. “Overpricing a home can lead to it sitting on the market and ultimately selling for less than if it had been priced right to begin with,” says Hale. “The market is competitive, but only for homes that are well-priced and move-in ready.”

For buyers, the message is clear: patience pays. As long as mortgage rates remain elevated, and inventory continues to grow, the market will likely continue to shift in their favor.