Realtor.com writes, "In a slight setback for homeowners, $200 billion was shed from the total value of household real estate during the first months of 2025—but it remained the fourth-highest on record.
The aggregate market value of all U.S. homes owned by those living in them retreated to $47.9 trillion during the year's first quarter, down from $48.1 trillion at the end of 2024, according to the most recent release of the Federal Reserve Z.1 Financial Accounts.
This reflects a continued pullback from the highest total of $48.8 trillion, recorded in the second quarter of 2024, according to a recent Flow of Funds analysis by Realtor.com® economists. Yet despite the downturn that has occurred across three consecutive quarters, homes gained $960 billion in value over the last year, representing a 2.1% uptick.
Realtor.com senior economist Jake Krimmel attributes the modest decline in total real estate asset values to a weaker house price growth and a slowdown in new construction.
"While prices are still increasing, there has been some softening, as inventory grows and high mortgage rates continue to weigh on the market," he explains.
Meanwhile, new home completions were down 12.3% in April compared to a year ago, signaling that both prices and inventory levels are driving the slowdown in aggregate housing values, he adds.
Home equity remains near peak, debt soars
Total home equity, which is a share of the home's value that a homeowner owns outright, closely followed the aggregate real estate value's path, falling by $250 billion in Q1 to $34.5 trillion. However, equity saw an increase of $590 billion over the last year.
When measured as a proportion of real estate value, equity was at 72% during the new year's first quarter, having fallen behind all four quarters in 2024—but was still higher than any other time between 1961 and 2023.
Realtor.com economist Jiyai Xu, who examined the Flow of Funds data, says that while not a record, the current high home equity represents a "cushion" for homeowners and the economy alike.
Notably, even if homes were to lose 10% of their value overnight, equity would still be at a respectable 68.9%, similar to mid-2021 levels. Even in case of a 20% plunge in home prices, homeowners would be no worse off than they were in 2019, with equity at 65%.
"The slight recent declines in aggregate value and total home equity are not cause for concern, overall," notes Krimmel, pointing to a vast existing supply shortage that continues to put upward pressure on home prices.
"Although the market is coming into better balance, large price declines nationally are extremely unlikely in the near term," adds the economist.
At the same time, the first three months of 2025 saw total mortgage debt climb to a new high of $13.4 trillion, up $45.3 billion, or 0.3%, from the previous quarter. Compared to the beginning of 2024, mortgage debt increased 2.9%, or $374.5 billion.
Krimmel points out that despite the modest uptick in mortgage debt, homeowners are still sitting on a near-record level of equity."
Source: Realtor.com
Written by: Snejana Farberov
Published: June 16, 2025
Posted by Grossman & Jones Group on
Leave A Comment