Is the Housing Market Actually “Healthy”? Here’s My Scorecard to Find Out

In This Article

With all the headlines, noise, and confusion surrounding today’s housing market, it’s easy to assume things are still broken. But is that really the case? Could we actually be in a healthy housing market in 2025?

That’s the question I’ve been asking myself lately. And it started after reading a new piece by Logan Mohtashami—an analyst I’ve followed and respected for years. Logan isn’t about hype or clickbait. He’s a data guy, through and through, with a strong forecasting track record. So when he published a headline claiming that “the housing market is actually much healthier in 2025,” it made me pause.

Could that be true?

We’ve all been living in the aftermath of a housing cycle that’s felt anything but normal. Still, I decided to dig into the data, think it through, and figure out where we really stand today. Here’s what I found.

Defining a “Healthy” Housing Market

Before we decide if we’re in a healthy market, we need to define what that means. I put together a scorecard of five key indicators that I believe define a healthy housing market:

1. A solid balance between supply and demand
2. Home prices generally keeping pace with inflation
3. Healthy transaction volume (homes actually selling)
4. Reasonable affordability for buyers
5. Low levels of distress—few foreclosures and delinquencies

By this scorecard, the market hasn’t looked healthy for a while.

Let’s think about where we’ve been:

• Supply and demand? Not even close. We’ve been in a severe sellers’ market since 2018.
• Transaction volume? Down 50% from 2022 levels and 30% off normal baselines.
• Affordability? Worst it’s been in 40+ years.
• Distress levels? Surprisingly low—that’s been the one bright spot.

So, it’s no wonder a lot of people find the idea of a “healthy” housing market pretty hard to believe.

But There Are Signs of Life

Here’s where Logan’s argument starts to make sense. Some important data points are moving in the right direction:

• Pending home sales are up year-over-year despite higher mortgage rates.
• Demand is holding steady and actually increasing YoY.
• Inventory is rising—32% higher than last year, although still below 2019 levels.

These are good signs, and they align with what we’ve been tracking in our monthly market updates. But positive movement doesn’t necessarily equal a healthy market. So, let’s go back to the scorecard and take a fresh look.

Housing Market Health Scorecard – 2025

1. Balance Between Supply and Demand

Inventory is rising. Days on market (DOM) is back to around 53, just shy of the pre-pandemic average of 60. We’re getting closer to a balanced market. If 2019 was the baseline for a “normal” year, we’re approaching that again.

Score: Healthy

2. Prices Keeping Up With Inflation

So far, home prices are pacing inflation. That’s what we want. Not booming. Not collapsing. Just steady.

Score: Healthy

3. Transaction Volume

This one’s still rough. We’re hovering around 4 million home sales annually. That’s well below where we should be for a healthy market.

Score: Not Healthy

4. Affordability

Still one of the weakest points. Home prices are high. Rates are high. Wages haven’t caught up. Until one of those moves, buyers are squeezed.

Score: Not Healthy

5. Distress and Delinquencies

This is the strongest signal of health right now. Foreclosures are still below 2019 levels. Some early signs of stress in FHA and VA loans, but overall, delinquency rates remain low.

Score: Healthy

Final Score: 3 out of 5

That’s progress. Better than where we were. A year ago, we were probably at 1 or 2 out of 5. So yes—by the numbers—we’re more healthy than we’ve been in years but still not quite where we want to be.

Where Things Go From Here

The two metrics still dragging us down—affordability and transaction volume—are closely connected. If affordability improves, transaction volume should follow. But how does that happen?

There are only a few options:

• Lower mortgage rates
• Higher wages
• A price correction (though that could jeopardize our price/inflation balance)

Right now, I don’t expect rates to fall dramatically in the next few months. Prices might stagnate a bit, but I don’t expect major declines. So I think we’ll be in this “in-between” phase a little longer—something closer to stability than chaos, but still not totally healthy.

A Quick Word on Investing

Just because a market isn’t “healthy” doesn’t mean it’s a bad time to invest.

In fact, some of the best opportunities come when things are unbalanced. I bought my first property in 2010—hardly a textbook healthy market. The same goes for many investors in 2020–2021. Those markets were chaotic but extremely profitable if you had the right strategy.

The best deals often come in times of uncertainty, and that’s what we’re seeing right now. More inventory, less competition, longer decision windows. That’s good news for prepared investors.

Of course, I’d love to hear your thoughts—do you think the market’s healthier than it was a year ago?