The 1 Factor That Explains Everything Happening with Home Prices Right Now

Home prices are cooling off. That's the headline, and nationally, it's true. But zoom in on individual markets, and the picture looks nothing like the national average suggests. Some areas are still seeing solid price growth. Others have gone flat. A few have dipped slightly negative. The national number is real, but it blends several very different local stories into one figure.

What separates one story from another comes down to a single variable: inventory.

Why Inventory Decides the Outcome

The logic is simple, even when the headlines make it sound complicated.

1. More homes for sale gives buyers options.

2. More options means less competition for any single listing.

3. Less competition means sellers cannot push prices as high.

Flip that around, and a tight supply of homes puts buyers in competition with each other over a small pool of listings, which pushes prices up.

That relationship is playing out visibly across the country right now. Markets where inventory has climbed back to, or above, pre-pandemic 2019 levels are seeing prices flatten or dip slightly. Markets where inventory is still well below those 2019 benchmarks are still seeing prices climb. Lance Lambert, CEO of ResiClub, put it this way:

"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."

What the Maps Show

Compare where inventory stands today against 2019 levels, and most of the country is still short of where it was. That shortfall is exactly why prices are still climbing, even if only moderately, in the large majority of states.

The more interesting story is in the minority of markets where prices are falling, since that is what is driving the headlines. According to Realtor.com, 15 states plus Washington, D.C. have now climbed back above pre-pandemic inventory levels, some by a wide margin.

Now compare that against Federal Housing Finance Agency (FHFA) data on how home prices moved in those same states over the past year.

The states with the biggest inventory rebounds are largely the same states seeing prices flatten or slip. That overlap is not a coincidence. It is cause and effect. The national average of roughly 1.7% price growth blends two different stories: a small group of markets with rising supply where prices are easing, and a much larger group of markets still short on inventory where prices continue to climb.

What This Means If You're Buying or Selling

If you're a buyer, the market you're shopping in matters more than the national headline. In places like Texas, Colorado, or Florida, inventory has given buyers real negotiating room: more choices, less competition, and sellers who are more willing to make a deal. In tighter markets, especially much of the Northeast, buyers are still facing real competition for a limited number of listings.

If you're a seller, pricing strategy carries more weight than it has in years. In a market where inventory has risen, overpricing is one of the fastest ways to sit unsold and eventually close for less than a correctly priced listing would have brought on day one. In a market where inventory is still tight, sellers hold an advantage, but pricing accurately still matters if the goal is a fast sale to a serious buyer rather than a slow negotiation.

Christopher Munkel treats this inventory-to-price relationship as the first diagnostic question in evaluating any market, not just the one where a client happens to be searching. A national headline about cooling prices says almost nothing about what a specific buyer or seller should expect. The local supply of homes for sale says almost everything. That is the question Munkel Real Estate Solutions works through with clients before any conversation about offer price, listing price, or timing: not what the national average is doing, but what inventory is doing in the market that actually matters to them.

Before trusting a national headline about home prices, three questions matter more than the average: How does current inventory in that specific market compare to 2019, since that comparison points to whether prices are more likely to keep climbing or start to soften? How long are homes sitting before they sell, since that number typically shifts before price does? And how many similar homes are actually competing for the same buyer, since a handful of overlapping listings can move negotiating power as much as a large citywide inventory swing.

Bottom Line

Where you are matters more than the national average right now. Before acting on a headline about home prices rising or falling, find out what inventory looks like in the specific market in question. That single number explains more about pricing power than almost anything else available today.

Source: ResiClub Analytics, Realtor.com, and the Federal Housing Finance Agency (FHFA).