Will Home Prices Continue to Increase?

There are many unsubstantiated theories about what is happening with home prices. From those who are worried that prices are falling (data shows this is untrue), to those who are concerned that prices are again approaching boom peaks because of “irrational exuberance” (this is also untrue as prices are not at peak levels when they are adjusted for inflation), there seems to be no shortage of opinion.

However, the increase in prices is easily explained by the theory of supply & demand. Whenever there is a limited supply of an item that is in high demand, prices increase. It is that simple. In real estate, it takes a six-month supply of existing salable inventory to maintain pricing stability. In most housing markets, anything less than six months will cause home values to appreciate and anything greater than seven months will cause prices to depreciate (see chart below).

According to the Existing Home Sales Report from the National Association of Realtors (NAR), the monthly inventory of homes for sale has been below six months for the last five years (see chart below).

Bottom Line

If buyer demand continues to outpace the current supply of existing homes for sale, prices will continue to appreciate. Nothing nefarious is taking place. It is simply the theory of supply & demand working as it should.

Source: Keeping Current Matters

Chrysti Tovani

Chrysti Tovani is a Fair Oaks real estate advisor, life-transition specialist, and the author of Downsizing with Intention. Her work is built around one idea: making room for what comes next. Through The Making Room Framework™, she helps people sell long-held homes, downsize with clarity, and move through major life changes with confidence, care, and a real plan.

With decades of experience across real estate, mortgage, and title, Chrysti brings deep industry knowledge and thoughtful preparation to every move. She is a Seniors Real Estate Specialist® (SRES) and a Certified Probate and Trust Real Estate Specialist, and her approach blends strategic marketing, skilled negotiation, and emotional intelligence so each transition is handled with both precision and heart.

Chrysti is also the founder of I Love Fair Oaks, a hyperlocal media platform celebrating trusted businesses and community life in Fair Oaks, California, a beloved Sacramento County community known for its historic village, the American River Parkway, and a small-town feel that keeps people here for decades. She has called it home for more than 35 years. Chrysti is a licensed REALTOR® with eXp Realty of California, DRE #01118449.