Home Values Are Rising in 2025 – Why the Media Gets It Wrong
Home Values Are Rising Despite Media Claims -
In today’s real estate market, there’s a lot of noise from the media suggesting that home prices are falling. Headlines scream about declining average and median home prices, painting a picture of a cooling market. But as a 40-year veteran in the mortgage industry, I can tell you that’s not the whole story. The reality is that home values are increasing, driven by a chronic lack of inventory for the types of homes buyers want. What we’re seeing is a shift in what sells: more affordable, practical homes suited to modern families are selling faster, while big, luxury properties sit on the market longer due to fewer buyers in that segment. This mix is pulling down average and median prices, but the underlying value, especially when measured per square foot, is on the rise.
Let’s break this down with the latest data from June 2025, courtesy of the National Association of Realtors (NAR), and explore why this trend is happening.
The Current Snapshot: Sales Are Stable, But Inventory Tells the Tale.
Existing home sales in June 2025 came in at an annualized pace of 3.93 million units, unchanged year-over-year but down 2.7% month-over-month. This is against an estimate of -0.7%, so it’s a bit softer than expected. But look closer: the median home price hit $435,300, up 2% from last year and 2.7% from May. That’s not a fall - that’s growth!
Over the long term, sales have fluctuated, peaking around 7 million units in 2005 and dipping below 4 million during the 2008 crisis. Today, we’re at levels similar to the early 2010s, but with one key difference: inventory is tight. Active listings in June 2025 stood at 1.53 million units, up 16% year-over-year but still down 0.6% from May. That’s 4.7 months’ supply - close to the normal 4.6 months, but far from the balanced 6 months we’d like to see for a healthy market.
This scarcity is pushing values up. Homes spent an average of 27 days on the market, unchanged month-over-month but up from 22 days in June 2024. Buyers are competing for what’s available, and as NAR Chief Economist Lawrence Yun notes, “The record high median home price highlights how American homeowners’ wealth continues to grow - a benefit of homeownership. The average homeowner’s wealth has expanded by $140,900 over the past five years. Multiple years of undersupply have driven record-high home prices. Home construction continues to lag population growth.”
Internals Reveal Buyer
The breakdown of buyers and sales types further explains the “price drop” narrative:
- Sold above list: 21% (down from 29% last year)
- First-time homebuyers: 30% (up from 29%)
- Cash buyers: 29% (up from 28%)
- Investors: 14% (down from 16%)
The Key Metric: Price Per Square Foot and Lot Size Trends. To see the true value story, we need to look at the price per square foot and lot sizes over the last 10 years. Home sizes and lots are getting smaller to meet modern family needs - think efficient, low-maintenance properties rather than sprawling estates. This makes homes more affordable on paper, but per square foot, values are climbing due to demand outstripping supply. For a visual, check out this chart from the Federal Reserve Economic Data (FRED) showing the median listing price per square foot from 2016 to June 2025. It’s been steadily rising, from around $140 in 2016 to over $200 in 2025, reflecting stronger underlying values even as overall prices fluctuate.
Lot sizes for new single-family homes have also trended smaller, from about 8,689 square feet in 2015 to around 8,312 square feet in 2023 (latest Census data), making homes more compact and cost-effective. This shift supports modern lifestyles but contributes to the perception of lower average prices. Combined with rising prices per square foot, it shows values are appreciating - there’s just not enough inventory of desirable, family-friendly homes to go around.
Why the Media Gets It Wrong - and What It Means for You
The media focuses on top-line numbers like median prices without context. Yes, if more $300,000 homes sell while $1 million mansions linger, the average drops. But that’s not a market crash; it’s a market adapting. Undersupply in mid-tier, family-oriented homes (think 3-4 bedrooms, efficient layouts) is the real driver, fueled by years of underbuilding post-2008 and rising construction costs.
For buyers: This is a great time to lock in if you can find the right fit. With rates potentially stabilizing, get pre-approved to compete in this inventory-constrained environment.For sellers: Price competitively, especially if your home fits the “modern family” mold - you’ll move faster.
About the Author:
Steve McNeal is the President and Loan Officer at First Capital Mortgage Inc., with over 40 years of experience in the mortgage and real estate industry (NMLS #256426, CA NMLS #2228346). Based in Modesto, California, Steve specializes in helping clients achieve their homeownership dreams through personalized loan solutions and innovative tools like co-branded social media marketing for real estate partners. He has held roles at companies like American Financial Network, Inc., New American Funding, and more, focusing on business growth, mortgage banking, and client education. Contact Steve at steve@firstcapitalmortgageinc.com or (209) 522-7100 to get started.
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Stop Losing Leads! - First Capital Mortgage
Hello, future partner! My name is Steve McNeal, and I have over 39 years of experience in the mortgage and real estate industry. I want to help you grow your business and capture more potential leads. First Capital Mortgage offers co-branded social media marketing tools for our partners that no other Mortgage Lender or Mortgage broker in the Central Valley, or Knoxville TN is currently offering. Don’t miss another potential client. Schedule a time below to learn more about how I can help you grow your business.
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Steve McNeal – 1st First Capital Mortgage
Meet Steve Steve McNeal President & Loan Officer | NMLS #256426 | Speaks English steve@firstcapitalmortgageinc.com (209) 522-7100 Apply Now CA NMLS #2228346 […]
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Steve McNeal, based in Modesto, California, United States, is currently a Mortgage Broker at First Capital Mortgage Inc., bringing experience from previous roles at American Financial Network, Inc., New American Funding, Brain-Based Coaching for Performance, Love of Life, and Commercial Financing Center. Steve McNeal holds a 1984 – 2015 . With a robust skill set that includes Mortgage Banking, Residential Homes, Sales Management, New Business Development, Business Strategy and more, Steve McNeal contributes valuable insights to the industry. Steve McNeal has 4 emails and 1 mobile phone number on RocketReach. … Redirecting you to the search page. If you’re not automatically redirected, please click here · Find contact details for 700 million professionals. …
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