Looking Back at 2025’s Real Estate Market

4th Quarter 2o25

The government shutdown affected our market more than most expected as it really impacted buyer confidence despite lower mortgage rates and a good selection of homes to choose from. The number of sales dipped by 5% and when combined with more homes hitting the market, we saw inventory levels rise above 3 ½ months for the first time in a decade.

There has been considerable focus on how homeowners are hesitant to sell due to their low mortgage rates. However, it appears that more of these owners are now opting to sell, whether for job relocations or the need for a larger or smaller home. Additionally, we saw a decrease in sales prices by approximately 2% during the quarter, a trend we haven’t witnessed locally in quite some time. This is promising news for buyers, as it means an increased selection of homes, lower rates, and reduced prices.

Q1 through Q3 2025

The first three quarters of 2025 we saw the local real estate market on an upswing with sales and sales prices up slightly. However the government shutdown in October and early November negatively impacted our local market significantly. What was surprising was just how quickly the market turned. This was despite mortgage rates continuing to fall from a high in January at just above 7% and ending the year at 6.15%.

Mortgage rates – A good rule of thumb is that a 1% change in mortgage rates affects a buyer’s buying power by about 10%. Since 1971, when Freddie Mac began tracking mortgage rates, the average rate is 7.7%. In 1981 rates hit a record high of 18.6%. In 2021 rates dropped to their lowest level ever at just 2.65%. In 2025, we saw rates slowly come down almost an entire percentage point, giving buyers a much needed boost in buying power.

SUMMARY OF 2025

Colorado Springs & El Paso County 2025 Real Estate Market Recap: The Colorado Springs housing market continued moving away from the extreme seller-leaning conditions seen earlier in the decade toward a more balanced, choice-driven market.

Inventory & Supply

Inventory reached its highest levels in over a decade, but still well below historical highs in 2011 and 2008. In summer 2025, active listings in the region hit their highest point since 2014.
Inventory topped 4 months’ of supply but settled back down late in the year, which – compared with the tight markets of recent years – gave buyers significantly more selection.

Sales Activity

Home sales in 2025 increased modestly to over 9600 units and have beensteady the past 3 years.
However, sales slowed during the government shutdown in the late fall, chasing many buyers to the sidelines.

Prices

Home prices climbed early in the year, with average prices maxing out at$586,000 in April, median prices breaking the $500,000 barrier in the spring.But as the year wore on prices settled back down as they typically do.However there was a more dramatic reduction in prices thanks to the government shutdown late in the year.)
Price growth has been slow & steady the last 3 years.

Market Dynamics

The higher inventory led a slight rise for the days on market.
Buyers had more choices and more time to make decisions, while sellersfaced greater competition and needed stronger pricing and presentation tostand out.
However, the homes perceived by buyers to be great locations, in excellent condition and priced well, sold with multiple offers and at prices above what the market expected.

Underlying Factors

Market behavior in 2025 was shaped by broader economic uncertainty —including the impact of the government shutdown — even as mortgage rates trended modestly lower through the year.
Local affordability issues persisted despite price stabilization; long-term structural factors like housing supply shortages and high development costs continued to impact entry-level home availability.