'2025 Housing Market Looks Like A Year Of Struggle For States Like …' – Builders Now Hold Record Inventory

Southern states face mounting pressure from surging housing inventory, with builders holding unprecedented unsold homes heading into the next year. Active listings across the South’s 16 states hit 509,000 in November, nearly matching pre-pandemic levels of 515,000, according to analysis from Reventure Consulting.

Tennessee leads the inventory surge at 19.7% above 2019 levels, followed by Texas at 17.4% and Florida at 15%. The increases sharply contrast with other regions, where the Northeast remains 47% below pre-pandemic inventory and the Midwest trails by 36%.

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“No one in the housing market wants to admit this, but the South is beginning to show a lot of similarities with the mid-2000s housing bubble,” Nick Gerli, CEO of Reventure Consulting, said in a recent post on X, formerly Twitter. He pointed to overvalued prices, slowing demand and spikes in both resale and new home inventory as warning signs.

The situation appears particularly acute among builders, who currently hold over 300,000 homes for sale in the South – nearly double the long-term average of 157,000 maintained since 1973.

The record inventory suggests continued pressure through 2025.

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Despite the challenges, national home prices are expected to rise 4% in 2025, returning to pre-pandemic growth rates, according to Redfin projections reported by CNBC. However, borrowing costs remain a wild card, with mortgage rates forecast to average 6.8% amid potential volatility.

“If the housing market were going to crash, it would have already crashed by now,” Daryl Fairweather, Redfin’s chief economist, told CNBC. “The housing market has been so resilient to interest rates going up as high as they have.”

Rising insurance costs and climate risks may further complicate the market, particularly in Florida and Texas coastal regions. Insurance policies in high-risk areas increasingly carry premium price tags, affecting overall affordability.

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The incoming Trump administration’s economic policies could further impact the market dynamics. “We kind of have some mixed signals right now in terms of what may or may not happen to home prices,” said Jacob Channel, senior economist at LendingTree.

He noted that proposed tariffs on building materials and stricter immigration policies could drive construction costs higher, potentially constraining new supply despite current inventory levels.

Markets like Virginia and Maryland are bucking the Southern trend, maintaining inventory levels 40% below pre-pandemic figures.

However, Gerli noted that states like Texas, Florida and Tennessee could face pressure in 2025, with inventory continuing to build and possible price declines in certain cities.

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