Week of July 14: The U.S. residential real estate market is showing a mix of familiar challenges and encouraging trends. After the frenzied, seller-dominated markets of the pandemic years, the summer 2025 housing scene feels more balanced than it has in a while. Inventory is finally climbing, giving buyers a bit more breathing room, but mortgage rates remain high, keeping affordability front-and-center. Below, we'll break down the key national trends in inventory, interest rates, home prices, buyer/seller activity, and how consumers are feeling about it all.
Inventory and Supply
One of the biggest changes in 2025 has been the much-needed boost in housing supply. Active listings have risen significantly from last year, reaching levels not seen since before the pandemic. In fact, the number of homes for sale nationally is up about 28–30% compared to a year ago, marking nearly two years of steady inventory growth. For the second month in a row, active listings even climbed above the 1 million mark nationwide – a big milestone on the road back to a more normal market.
This increase in available homes means buyers have more options to choose from now than they did last summer. Properties also aren't flying off the market overnight anymore. The typical home is spending around 53 days on the market, which is about five days longer than this time last year. That's actually pretty close to the pre-2020 norm for summer, indicating a calmer, less frantic pace.
Importantly, new listings (the flow of homes coming onto the market) have improved slightly from 2024's lows – up around 6% year-over-year. Many homeowners who sat tight the last couple of years are finally testing the waters and listing their properties. However, new listings are still nowhere near historical levels. We aren't seeing the typical big spring surge of listings; this year's spring selling season was relatively muted.
Part of the reason is the “lock-in effect” – homeowners with ultra-low mortgage rates are hesitant to sell and give up those rates. As of late 2024, roughly 83% of mortgage holders had an interest rate under 6%, which is below today’s market rates. A lot of folks simply don’t want to trade their 3% loan for a 6.5% loan, so they choose to stay put. This has kept a lid on how much inventory can grow.
The good news is that supply is gradually improving despite these constraints. Total housing inventory (including homes under contract) is about 20% higher than a year ago. Compared to the extreme shortage of homes we saw in 2021-2022, the market is slowly rebalancing toward better equilibrium. That said, inventory is still about 10-15% below pre-pandemic norms in many areas. So while the crunch is easing, we're not fully back to “normal” supply levels yet.
Mortgage Rates and Affordability
Mortgage rates in mid-2025 are considerably higher than what many of us remember from a few years ago. As of this week, the average 30-year fixed mortgage rate sits around 6.7%, according to Freddie Mac’s weekly survey. Rates briefly dipped into the mid-6% range in early July but edged back up following strong economic news.
For context, these rates are more than double what they were at the 3% lows buyers enjoyed in 2021. Even though 6.5–7% is historically not unheard of, it feels high after a decade of ultra-cheap money. Many younger buyers are navigating mortgage payments that are several hundred dollars higher per month than they would have been for the same house a few years back, thanks to the combination of higher rates and still-elevated prices.
This jump in financing costs has undeniably strained affordability. It’s one of the main reasons home sales volumes remain relatively low (more on that below). Buyers have to either stretch their budgets or adjust their expectations of what they can afford. For example, on a $400,000 home purchase, a 7% interest rate versus a 3% rate can tack on well over $800 extra to the monthly payment. That reality is sidelining some would-be buyers, especially first-timers.
The silver lining is that mortgage rates have at least stabilized in the past few months, after see-sawing throughout 2024. Earlier this year, rates even touched the low-7% range, but they have since come down off those peaks. Many economists predict that rates will gradually ease later in 2025 or into 2026 if inflation continues to cool – but there’s no guarantee.
For now, agents and buyers are adapting to the “new normal” of rates in the 6’s. Creative strategies like seller-paid rate buydowns, adjustable-rate mortgages, and simply focusing on slightly less expensive homes have become common ways to cope with high borrowing costs.
Buyer Activity and Demand
Given the affordability squeeze, it’s no surprise that buyer activity has been somewhat subdued. Nationwide, the pace of home sales is below what we saw in the pre-pandemic era.
Existing home sales are hovering around an annualized rate of just over 4 million units, which is roughly flat compared to this time last year (and down from 5.5+ million in more “normal” times). High mortgage rates have created a bit of a stalemate: many buyers are holding off, and many sellers are also staying on the sidelines (contributing to the lower sales volume).
However, we’re not in a demand free-fall by any means – in fact, there are signs that buyers are slowly adjusting to current conditions. Mortgage applications for home purchases have actually been running higher than last year for most weeks of 2025.
This summer, purchase loan applications are up about 25% compared to the very depressed levels of a year ago. Part of that is simply that last summer’s demand was especially weak (when rates first spiked above 6% and shocked the market).
But it also indicates some pent-up demand is emerging. Buyers who sat out 2022-2024 are tip-toeing back in, perhaps accepting that 6-7% rates might be the reality for a while.
On the ground, agents are reporting that well-priced, move-in-ready homes do still attract interest. We’re not seeing the insane 20-offer bidding wars of 2021, but a desirable listing today can get multiple offers and go under contract relatively quickly. In many markets, there are still more buyers than there are attractive homes for sale – just not nearly the frenzy of two years ago.
Homes are taking a little longer to sell on average, as noted (about 7-8 weeks nationally), and pending sales (homes under contract) are actually running slightly below last year’s numbers. So demand isn’t surging by any stretch; it’s more like it’s bottomed out and is inching up from the lows.
One interesting trend is that first-time buyers remain a smaller portion of the market than usual. According to recent data, only about 30% of home sales in May were to first-time buyers, down from the mid-30s historically. Younger buyers are facing the double-whammy of high rates and high prices, and many have stepped back to rent or continue saving. Move-up and cash buyers (often older or trading down) are making up a bigger share of those who are actually transacting right now.
Home Prices and Pricing Trends
After years of rapid appreciation, home price growth has basically hit the pause button in 2025. Nationally, prices are more or less flat compared to a year ago. The median listing price in June was around $441,000, just 0.2% higher than June 2024.
Similarly, the median sale price of existing homes (which skews a bit lower than listing price) was about $423,000 in May, up only ~1% year-over-year. In other words, prices today are very close to what they were a year ago on average. This is a dramatic change from the double-digit annual gains we saw in 2021 and early 2022. Essentially, home values have plateaued at a high level.
In some local markets, prices have even dipped slightly over the past year, especially in parts of the West that saw huge run-ups (cities like Austin or San Francisco). In other areas – particularly the Midwest and Northeast – modest price growth is still occurring.
But when you average it out nationwide, appreciation is roughly zero to a few percent. Sellers can no longer assume they can name any price and get it. Overpricing a listing in this market is risky, because buyers have more choices and less urgency.
A key sign of this shift is the rise in price reductions. About 1 in 5 homes listed for sale (over 20%) have undergone a price cut recently, which is the highest rate of price reductions for any June since at least 2016. Price cuts have become increasingly common over the last six months, as sellers adjust their expectations to meet buyers’ budgets.
We’re also seeing many sellers offer incentives like closing cost credits or funds to buy down the buyer’s mortgage rate, rather than slash the headline price – but either way, the era of rampant bidding wars and “name your price” is behind us for now.
It’s worth noting that despite these adjustments, home prices are not crashing – they’re leveling off. In fact, nominal prices remain at record highs. Many homeowners are opting to hold off on selling if they aren’t happy with the bids they receive. There’s been a surge in delistings (owners pulling homes off the market unsold), which jumped nearly 50% year-over-year in the spring.
This suggests a lot of sellers would rather wait and try again later than accept a significantly lower price. That behavior is helping put a floor under prices. So, while we have more supply and less demand than before, it’s balanced enough that values are essentially holding steady. Economists forecast only very modest nationwide price changes for 2025 (on the order of a couple percent up or down), barring any major economic swings.
For buyers, this stabilization can be viewed as a positive – there’s less fear of missing out on rising prices, and more room to negotiate on individual listings. For sellers, it means pricing your home right from the start is important. Homes will sell, but they need to be priced close to fair market value and in good showing condition to attract today’s more price-sensitive buyers.
Consumer Sentiment
How are everyday people feeling about the housing market? In a word: cautious. Consumer surveys show that confidence in the housing market is still relatively low, though improved from the absolute gloom right after the rate spike. F
annie Mae’s latest Home Purchase Sentiment Index – which gauges Americans’ views on things like homebuying conditions and mortgage rate outlook – ticked down in June to 69.8 (out of 100). This index has been hanging around the high-60s to low-70s for many months, reflecting a pretty subdued mood.
The survey finds that a large majority of consumers think it’s a bad time to buy a home. About 71% of respondents said June was a bad time to buy (only 28% said it was a good time). This pessimism makes sense, given the combo of high prices and high financing costs.
It’s just tough for typical families to feel confident about jumping into a purchase right now. On the flip side, most people still say it’s a good time to sell – around 60% in that same survey – although that share has been edging down too. Sellers know the market isn’t as hot as it once was.
Consumers are also unsure about where things go from here. Many expect mortgage rates to stay the same or even rise further before they fall – only about a quarter of folks think rates will decline in the next year. And while many still expect home prices to increase (roughly 45% think values will be higher in a year, versus 22% who expect declines), the confidence in big price gains has waned. Essentially, people are adjusting their expectations: the days of ultra-cheap loans are over, and the days of 10-20% yearly price jumps are also over.
Despite these cautionary signals, there’s also a sense of resilience. We aren’t seeing panic or despair – just a sober understanding that the market has cooled. In some ways, that’s healthy. Buyers and sellers who need to move are still doing so, and many are finding that with the right approach (and a bit of patience) they can make a deal work in this environment.
TLDR
The national housing market in mid-July 2025 is markedly cooler and more balanced than the roller-coaster of a few years ago. Inventory is slowly improving, giving buyers more choices, but high mortgage rates continue to be the big hurdle for affordability. Home prices have flattened out, and both buyers and sellers are tiptoeing cautiously, feeling out this new normal. For real estate agents, staying on top of mortgage trends, pricing homes realistically, and educating clients will be key. While today’s market isn’t the free-for-all of 2021, it’s also not a bust – it’s something in between, a gradually normalizing market where savvy guidance can make all the difference.
Sources
- HousingWire – “Housing inventory actually fell last week. What is going on?” (Logan Mohtashami, July 2025)
- Realtor.com – June 2025 Monthly Housing Market Trends Report
- Freddie Mac – Primary Mortgage Market Survey (July 10, 2025)
- National Association of REALTORS® – Existing Home Sales Report, June 2025
- Fannie Mae – Home Purchase Sentiment Index, June 2025
- The Mortgage Reports – “Mortgage Rates Today” (July 14, 2025)
- McKissock – “The Full Measure – June 2025”