Housing Market Trends 2025: Sales, Prices, and Supply Analysis

The housing market trends are showing a slight cooling off, but prices remain high. Existing-home sales decreased by 2.7% in June, but the median sales price hit a record high of $435,300. This shows that while fewer homes are being sold, the ones that are on the market are still commanding top dollar. Let's dive into what's driving these trends and what they might mean for you, whether you're looking to buy, sell, or just keep an eye on the market.

Understanding Housing Market Trends: A Look at 2025

What's Happening in the Housing Market Right Now?

As someone who has been observing the real estate market for quite some time, I can tell you that things are rarely simple. We're seeing a mix of signals right now, which can be confusing. On one hand, sales are down a bit. On the other hand, prices are still climbing. Here's a breakdown of what recent data reveals:

• Sales Slowing: According to the National Association of Realtors® (NAR), existing-home sales dipped 2.7% in June compared to the previous month. This suggests that the market isn't quite as hot as it was earlier in the year.
• Prices Still High: The median existing-home price hit a record $435,300 in June, a 2% increase from last year. This means that even though sales are down, homes are still expensive.
• Inventory Slightly Up: The number of homes on the market is up by about 15.9% compared to last year. This gives buyers slightly more choices, but it's still not a huge amount.
• Mortgage Rates Remain Elevated: Mortgage rates are hovering around 6.75%, which is making it harder for people to afford homes.
• Forecast Indicates Further Cooling: A recent Realtor.com midyear housing forecast pointed out that sales for existing homes are expected to fall 1.5%

Why Are Prices Still So High?

Even with sales slowing, several factors are keeping home prices elevated. In my opinion, the biggest one is the persistent shortage of homes. For years, we haven't been building enough houses to keep up with the growing population. As NAR Chief Economist Lawrence Yun put it, “Multiple years of undersupply are driving the record high home price. Home construction continues to lag population growth.”

Here are other factors that impact home prices:

• Limited Construction: Even though construction has picked up a bit, it's still not enough to meet demand. This shortage is particularly acute in certain areas.
• Homeowner Wealth Growth: People who already own homes have seen their wealth increase significantly over the past few years. This makes them less likely to sell unless they get a really good offer, further limiting the supply.
• Mortgage Rate Impact: High mortgage rates are keeping some potential buyers out of the market, but they're also discouraging some homeowners from selling because they don't want to give up their lower interest rates. It's a double edged sword.

Regional Housing Trends : An In-depth Analysis

The US housing market, while sometimes discussed as a single entity, comprises varied regional trends. Understanding these nuances is vital for anyone looking to buy, sell, or invest in real estate. The most recent data underlines these regional discrepancies. Here's a breakdown:

Region	Month-over-Month Sales Change	Year-over-Year Sales Change	Median Price	Year-over-Year Price Change
Northeast	-8%	-4.2%	\$543,300	4.2%
Midwest	-4%	2.2%	\$337,600	3.4%
South	-2.2%	1.7%	\$374,500	0.3%
West	1.4%	-4.1%	\$636,100	1%

• Northeast: The Northeast saw the biggest month-over-month sales decline, but prices are still up significantly year-over-year. This could indicate a slowdown in demand in the face of high prices.
• Midwest: The Midwest is a bit of an outlier, with sales up slightly year-over-year despite a monthly decline. This might suggest more resilience compared to other regions, coupled with relatively affordable prices.
• South: The South continues to be a significant player, with modest sales growth year-over-year but the lowest price increase. Inventory is up, but affordability challenges remain. The number of active listings nationwide topped 1 million in May for the first time since late 2019.
• West: The West experienced a slight increase in sales month-over-month but a decrease year-over-year, along with a modest price increase. High prices continue to be a barrier in many Western markets.

The Impact of Mortgage Rates

Mortgage rates play a huge role in the housing market trends. As rates rise, it becomes more expensive to borrow money, which means fewer people can afford to buy homes. As Dr. Yun explained, “High mortgage rates are causing home sales to remain stuck at cyclical lows. If the average mortgage rates were to decline to 6%, our scenario analysis suggests an additional 160,000 renters becoming first-time homeowners and elevated sales activity from existing homeowners.”

I believe that if mortgage rates were to drop even a little, we'd see a significant increase in home sales activity. There's a lot of pent-up demand out there from people who are waiting for the right opportunity to buy.

Who's Buying Homes Right Now?

It's interesting to look at who's actually buying homes in this market:

• First-Time Homebuyers: First-time homebuyers are still a significant part of the market, making up 30% of sales in June. However, they face significant challenges due to high prices and mortgage rates.
• Cash Buyers: About 29% of transactions were cash sales, which is up from last year. This suggests that more people are relying on savings or investments to buy homes, rather than taking out mortgages.
• Investors: Individual investors and second-home buyers are pulling back from the market, accounting for only 14% of transactions. This is the lowest level since September 2022.
• Delisting Numbers: Rather than dropping their asking prices, many home sellers now appear to have opted to wait out the market. Realtor.com recently reported that delistings surged 47% in May compared with a year earlier, suggesting that sellers increasingly prefer to wait rather than negotiate.

What Does This Mean for Buyers?

If you're a buyer, this market presents both opportunities and challenges. On the one hand, you might have slightly more choices than you did a year ago. On the other hand, prices are still high, and mortgage rates are making it harder to afford a home.

Here's my advice for buyers:

• Get Pre-Approved: Before you start seriously looking at homes, get pre-approved for a mortgage. This will give you a clear idea of how much you can afford.
• Shop Around for Rates: Don't just go with the first mortgage lender you find. Shop around and compare rates from different lenders.
• Be Patient: The market is still competitive in many areas, so be prepared to be patient and make multiple offers.
• Consider Your Needs: Think carefully about what you really need in a home. Do you need a big backyard? A home office? Prioritize your needs and be willing to make compromises.
• Don't Overextend Yourself: With prices still high and mortgage rates elevated, you don't want to overextend yourself financially. Make sure you can comfortably afford your monthly payments.

What Does This Mean for Sellers?

If you're a seller, you're still in a pretty good position. Prices are high, and inventory is still relatively low in many areas. However, the market isn't quite as hot as it was a year ago, so you might need to adjust your expectations.

Here's my advice for sellers:

• Price Your Home Competitively: Don't overprice your home. Work with a real estate agent to determine a competitive price that will attract buyers.
• Make Necessary Repairs: Before you put your home on the market, make any necessary repairs. This will make your home more appealing to buyers.
• Stage Your Home: Staging your home can help it sell faster and for a higher price. Consider hiring a professional stager or doing it yourself.
• Be Prepared to Negotiate: Buyers might be more willing to negotiate than they were a year ago, so be prepared to make some concessions.
• Factor in Delisting: If a quick sale is important to you, it will be helpful to price your home competitively rather than delay selling it.

The Big Picture: Where is the Housing Market Headed overall?

Looking ahead, it's hard to say exactly where the housing market trends are headed. However, a few things seem likely:

• Mortgage Rates Will Remain a Key Factor: Mortgage rates will continue to play a big role in the market. If rates start to fall, we could see a surge in home sales. Realtor.com forecasts 30-year mortgage rates will remain higher than originally projected, averaging 6.7% across 2025 and ending the year at around 6.4%.
• Inventory Will Continue to Increase: I expect inventory to continue to increase, giving buyers more choices. However, it's unlikely that we'll see a huge glut of homes on the market.
• Price Growth Will Moderate: While I don't expect prices to crash, I do think that price growth will moderate in the coming months. Realtor.com economists project home prices will grow 2.5% through 2025.
• New Construction Remains Crucial: Realtor.com economists now project that single-family housing starts will fall 3.7% from last year, to just 980,000. Solving the housing shortage is critical to making the market more accessible for everyone.

The Homeownership Rate and the Economy

Housing market trends and the economy are interwoven. The current forecast projects the homeownership rate will drop to 65.2% this year, down from 65.6% in 2024 and 65.9% in 2023. Yun's point that “Expanding participation in the housing market will increase the mobility of the workforce and drive economic growth” is absolutely correct.

Bright Spots for Renters In a bright spot of news for renters, rent growth is expected to remain soft in 2025, with median asking rents down 0.1% in 2025, after falling 0.2% last year.

Benefits for Homebuyers in 2025's Housing Market

There are a few potential benefits for homebuyers in the current real estate housing market:

• More choices: While the supply of homes on the market is still relatively low, it has increased slightly in recent months. This means that potential homebuyers may have more options to choose from when looking for a home. The number of new homes available on the market also increased in February, which means that potential homebuyers have more options to choose from.
• Slower price growth: Although home prices are still rising, the pace of growth has slowed down in some areas. This could make it easier for homebuyers to afford a home in certain markets.
• Easier negotiations: In a slower housing market, sellers may be more willing to negotiate on the price of their home or other terms of the sale. This could give homebuyers more bargaining power and help them get a better deal on a home.
• Lower prices: While the median price of a new home rose slightly from a year ago, the increased inventory could lead to greater competition among sellers, potentially driving down prices.
• Leading indicator: New home sales are considered a leading indicator for the housing market, meaning that an increase in new home sales could signal a positive trend for the housing market overall. This could be good news for potential homebuyers who may be hesitant to enter the market during a downturn.