Home Prices Slow as Buyers Gain Power

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In May, U.S. home prices hit a record for that month at $440,997, yet annual price increases are slowing significantly—rising only 0.7% compared to last year. This marks the most modest year-over-year gain seen since mid-2023, signaling a cooling trend even amidst historically high pricing.

This moderation offers a critical shift in momentum for buyers who’ve long been competing in a seller-dominated environment. While prices remain elevated, the pace of appreciation is losing steam.

More Sellers, Fewer Buyers: The Market Is Rebalancing

Inventory is climbing and homes are lingering longer on the market. The number of active listings reached its highest point in five years this May, while existing-home sales slipped to their lowest level in seven months.

Homes took a median of 38 days to go under contract—the slowest May turnaround time in five years. High mortgage rates near 7% and overall buyer hesitancy are key contributors, giving the market a more deliberate and less frenzied pace.

Buyers Are Finding Leverage

The power dynamic is clearly shifting. Fewer bidding wars and more price reductions mean that buyers now have room to negotiate. Only about 31% of homes sold in May went for above asking price—the lowest for that month in half a decade.

Buyers willing to be flexible and patient may find opportunities just beyond their initial price range, as sellers increasingly offer price cuts or concessions to close deals.

Sellers Must Rethink Strategy

Gone are the days when sellers could list at any price and expect a quick offer. With homes taking longer to sell and buyer demand softening, pricing correctly from the start is more important than ever. Homes in good condition and priced competitively are still moving—especially in sought-after areas like Orange County—but the margin for error has narrowed.

Listings Climb While New Inventory Slows

Although the total number of homes on the market has grown, the pace of new listings has leveled off. New home listings declined slightly from April and only posted modest annual growth. Many homeowners are choosing to rent out their properties instead of selling, especially if they’re locked into lower mortgage rates.

This means buyers are often looking at older listings—making home presentation and strategic pricing even more essential for sellers.

Deal Cancellations Are Becoming More Common

Cancellations are on the rise. Nearly 15% of homes under contract in May were ultimately dropped—a record high for that month. This trend suggests that buyers are becoming more cautious, often backing out due to financing issues, second thoughts, or shifting economic sentiment.

Texas and Florida cities saw the highest cancellation rates, but even stable markets like Orange County need to pay attention. Having realistic expectations and flexible terms can help deals stay together.

What’s Happening in Orange County and Beyond

Anaheim and the broader Orange County market reflect many national trends. The median sale price in the area sits at $1.2 million, with homes spending around 34 days on the market. Active inventory rose over 22% year over year—an indicator that supply is growing even as buyer activity softens.

While price drops remain modest locally, the broader shift suggests that Orange County buyers may gain further leverage if the trend continues into late 2025.

Bottom Line

The housing market is evolving, and Orange County is no exception. Whether you’re looking to buy, sell, or simply understand your options, this moment requires strategy and local insight. With more homes available and less competition, buyers have a chance to make thoughtful, confident decisions.

Sellers can still succeed—especially in premium locations—but must stay competitive and responsive to the changing environment.

Thinking of making a move in Orange County? Let's connect. At Whitestone Real Estate, I help clients make informed choices and thrive in shifting markets. Reach out today and let’s turn this moment into your opportunity.

Reference: Katz, L. (2025, June 23). Home Prices Grow at Slowest Pace in Nearly 2 Years. Redfin.