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Published: Jul 12, 2022 8 min read
Photo illustration of a house correcting itself in many positions
Money; Getty Images

Talk about a turnaround: After two years of extreme bidding wars, packed open houses and sky-high prices, the housing market is finally starting to cool off.

While experts generally agree that the United States is not headed for a housing crash like the one that precipitated the Great Recession, some say there’s a risk of a correction — a type of pullback that’s typically more common and less intense than a crash.

Whether you're predicting a cooldown or correction (or neither), there’s no doubt the housing market today is very different than it was in 2020. Nobody can predict the future, but for those determined to read the tea leaves, here are five signs the U.S. housing situation may be finally slowing down:

Inventory is growing

A serious inventory shortage was one of the biggest drivers of increased housing prices during the pandemic. Demand was booming thanks to the proliferation of remote work, but there just weren’t enough houses for all the people who wanted to buy (in the places they wanted to buy, at least).

The housing supply is still significantly smaller than it was before the pandemic, but the crunch is beginning to ease. There were 1.16 million unsold homes on the market at the end of May, according to the National Association of Realtors (NAR) — a 13% jump from the previous month.

And in June, there were 19% more active listings on the market compared to a year earlier, according to data from Realtor.com. That’s the biggest annual increase since Realtor.com began tracking that metric in 2017. The gains have been especially large in former pandemic hot spots like Austin, Texas, which saw a 145% surge in inventory on an annual basis last month.