The U.S. housing market continues to send mixed signals in 2025. While new construction has shown pockets of growth, the resale market tells a different story. Existing home sales remain stuck at low levels, struggling to gain traction despite a growing number of homes on the market.
According to the latest report, May 2025 marked the weakest May for existing-home sales since 2009, with transactions barely rising compared to April. Even though housing is a seasonal market where spring typically brings momentum, this year’s data highlights the ongoing affordability crisis keeping many buyers on the sidelines. (realestatenews.com)
The Numbers Behind the Slowdown
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Sales Volume: Existing-home sales came in at a seasonally adjusted annual rate of 4.03 million units. That’s only a modest improvement from April and still well below the 2024 levels.
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Prices Remain High: The median existing-home price reached $422,800, up 1.3% from last year. This marks nearly two years of consecutive price increases, showing how resilient prices have been despite weaker demand.
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Inventory Growth: Unsold inventory climbed more than 20% year-over-year, providing more options for buyers. While this suggests a move toward balance, it hasn’t yet translated into a sales rebound.
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Mortgage Rates: Persistently high borrowing costs remain the elephant in the room. Many buyers simply cannot afford to lock in mortgages at today’s elevated rates.
Why Buyers Are Hesitant
Several overlapping factors are weighing on demand:
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Mortgage Rate Pressure
Even small differences in mortgage rates can make or break affordability. A buyer who could qualify for a $400,000 home two years ago may now only qualify for $325,000, forcing tough compromises or pushing them out of the market entirely. -
Sticky Home Prices
Despite weaker demand, prices are not falling. Sellers, many of whom locked in ultra-low mortgage rates during the pandemic, are reluctant to cut prices or move. This “lock-in effect” keeps inventory tighter than it could be and props up values. -
Economic Uncertainty
While employment and wage growth remain steady in many sectors, inflation concerns and Federal Reserve policy have left many Americans cautious about making long-term financial commitments.
A Market at a Crossroads
The current market dynamic is unusual:
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Inventory is growing, which should normally relieve pressure on prices.
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Prices continue to climb, showing that demand still exists just not enough to push sales higher.
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Buyers are selective, with more leverage than they’ve had in years, but affordability constraints still dominate decisions.
In short, the housing market is caught in a balancing act between supply growth and financial pressure.
What Could Unlock Momentum
The next six months could be pivotal. Here are three shifts that might help unfreeze the resale market:
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Lower Mortgage Rates
Many experts believe sales will not meaningfully rebound until rates fall closer to 6% or below. A rate cut by the Federal Reserve could be the catalyst buyers are waiting for. -
More Inventory and Competition
If inventory continues to grow, especially with homeowners deciding to list before values soften, buyers could gain even more negotiating power potentially slowing price growth. -
Income Growth
Rising wages and stable employment could give more buyers the confidence to step in, even in a high-cost environment.
What It Means for You
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For Buyers: Patience may pay off. With more homes hitting the market and the potential for softer rates ahead, waiting could mean better options and improved affordability. That said, buyers ready to act now may find less competition compared to the peak pandemic years.
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For Sellers: Strategic pricing is key. Homes that are updated, well-located, and priced competitively are still selling. However, overpricing could leave properties sitting on the market longer than expected.
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For Agents and Professionals: This is a market where guidance matters more than ever. Helping clients understand the realities of affordability, financing strategies, and timing will set professionals apart.
Bottom Line
The housing market in 2025 is defined by contrast: rising inventory but sluggish sales, high prices but limited affordability, and growing buyer leverage but continued hesitation.
For now, the resale market is muted, waiting for a trigger most likely a meaningful drop in mortgage rates to bring buyers back in force. Until then, expect a cautious environment where well-informed strategies make all the difference.
Source: “High rates, prices keep existing home sales muted,” Real Estate News, June 23, 2025. Read the original article