Market Highlight: Cruise Control

Week of July 28: The U.S. housing market is settling into a more balanced groove during the week of July 28. Things have calmed. Inventory is rising, prices are steadying, and the pace of sales has eased up. Mortgage rates remain a hurdle. They’re still high, but buyers and sellers alike are gradually adjusting to the “new normal.” Below is an overview of how the residential market is performing nationally this week, covering trends in home prices, inventory, mortgage rates, and buyer/seller behavior. We’ll also touch on what to expect in the coming weeks and key challenges and opportunities for real estate agents.

Home Prices Level Off at Highs

Home prices nationwide are holding near record highs, but the explosive growth of past years has cooled. In fact, annual price appreciation is now minimal. The median price for an existing home in June was around $435,000, only about 2% higher than a year earlier, marking a new high, but by a very small margin.

Similarly, listing prices on the market are barely up from last summer. In short, prices have flattened out after the double-digit jumps seen during the pandemic boom. This is a big change from recent years and largely a result of buyers hitting an affordability wall.

Notably, some sellers are finding that bidding wars are no longer a given. A year or two ago, a desirable listing might have seen a dozen offers pushing well above the asking price. Now, while the most attractive homes in certain “hot” pockets can still get multiple offers, it’s more tempered. Many properties are selling at or even slightly below the asking price.

In fact, roughly 1 in 5 homes listed nationally had to cut their price to attract a buyer in the past month, an unusually high rate of price reductions by historical standards. This doesn’t mean home values are dropping significantly overall; it means sellers are adjusting their expectations to meet today’s demand.

Accurate pricing is important in this market. Agents are advising clients that an overpriced home is likely to linger unsold until a price correction is made. The takeaway on pricing: values remain high, but today’s buyers are much more price-sensitive, and sellers need to be realistic to make a deal.

Inventory Inches Up, Homes Take Longer to Sell

Perhaps the biggest shift in 2025 has been the improvement in housing inventory. After years of severe listing shortages, more “For Sale” signs are popping up across the country. Nationwide, the number of active listings is up significantly (on the order of 15–25% higher than this time last year).

In fact, for the first time since 2019, the total homes on the market have climbed back above the 1 million mark. This means buyers have more choices now than they’ve had in recent memory.

The rise in inventory is partly because more owners are deciding to list (enticed by still-high prices or necessary life changes), and partly because homes are sitting on the market longer instead of being snapped up overnight.

Even with this growth, inventory isn’t fully back to pre-pandemic “normal” levels – it’s still somewhat below the late 2010s average. Some regions remain tighter than others. For example, parts of the Northeast and Midwest still feel constrained (few new builds and many owners staying put), whereas parts of the South and West have seen inventory bounce back more strongly (helped by a surge in new construction).

But on the national level, months’ supply of homes for sale has improved to roughly 4–5 months at the current sales pace. That’s a big jump from the extreme ~2 months’ supply we saw at the height of the boom, and it’s inching closer to the 5–6 months that define a historically balanced market. In practical terms, this shift toward balance means neither buyers nor sellers have an overwhelming upper hand everywhere – it really depends on local conditions and pricing.

One clear sign of this rebalancing is that houses aren’t selling as quickly as they did in the red-hot market. The typical home nationally is now on the market for around 50 to 60 days before going under contract. That’s about a week or more longer than the same period last year, and notably slower than the lightning-fast sales of 2021-2022.

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In fact, current market time is comparable to 2019, reflecting a return to a less frantic pace. For sellers, this longer timeline can require patience – homes may no longer “fly off the shelf” in a weekend. For buyers, it’s actually a welcome change: they have a bit more breathing room to consider their options instead of needing to make a do-or-die offer the day a home hits the market. Well-priced, move-in-ready homes can still sell relatively quickly, but overall the tempo is more relaxed now.

It’s also worth noting the role of new construction in the inventory picture. Home builders have ramped up production in many markets, and newly built homes now make up a larger portion of what’s for sale. Builders are facing the same hesitant buyers, so they’ve gotten creative, offering incentives and pricing homes competitively. In fact, a significant share of builders have even trimmed prices on new homes or are throwing in perks (like upgrades or help with closing costs) to attract buyers.

There’s nearly a 10-month supply of new houses available (a sign of ample inventory in the new-home segment), and the median price of new homes has actually come down slightly from a year ago. For buyers struggling to find options in the resale (existing home) market, new homes could present an opportunity – many builders are eager and even paying commissions to buyer’s agents. For agents, keeping an eye on local builder inventory and incentives can open up additional possibilities for clients.

Overall, having more inventory is good news for anyone representing buyers: there’s a better chance of finding a home that checks the boxes without having to stretch budgets to extremes or waive contingencies. Buyers should still be prepared to act when they find the right home, but the pressure cooker environment has eased. For those representing sellers, the increase in supply means more competition. This puts a premium on proper pricing and presentation.

Homes need to stand out a bit more now to get top dollar, whether that’s through savvy staging, making necessary repairs, or aggressive marketing. Managing client expectations on both sides is key – we’re not in the ultra-tight seller’s market anymore, but it’s not a buyer’s free-for-all either. It’s a transitional market, and up-to-date local data is gold for agents guiding their clients.

Mortgage Rates Keep Pressure On Buyers

If there’s one factor still pumping the brakes on the market, it’s mortgage rates. As of late July, rates for a 30-year fixed loan are hovering in the mid-to-upper 6% range – roughly around 6.7% to 7% on average. We saw a slight uptick recently (rates rose a bit from earlier in the month), and they’ve been bouncing around between about 6.5% and 7% for several months now.

The good news is that this stability is better than the volatile spikes we saw last year. The bad news: today’s rates are nearly double what buyers enjoyed in 2020-2021. That dramatic jump has sharply reduced purchasing power. A typical middle-income household can afford significantly less home at a 6.75% interest rate than they could when rates were 3%. Higher rates translate into much larger monthly payments, so affordability remains the number-one challenge in the current market.

These elevated financing costs are a big reason why buyer demand, while present, isn’t booming. A lot of would-be buyers have had to put their plans on hold or scale back expectations. Many are choosing to rent a bit longer or stay in their starter home rather than trade up, hoping that either rates come down or they can save more.

In fact, in most major metro areas, the cost of renting is still lower than the cost of buying a similar home at today’s rates – a reversal from a few years ago that’s giving some first-time buyers pause. It’s no surprise then that home sales are sluggish by historical standards, as many people are simply priced out or waiting cautiously on the sidelines.

However, buyers and lenders are adapting in creative ways. We’re seeing more use of adjustable-rate mortgages (ARMs), temporary rate buydowns, and seller-paid points to help bring down that initial monthly payment. Some sellers (and home builders) are offering to buy down the buyer’s rate for a couple of years as a concession. And plenty of buyers are taking the mindset of “marry the house, date the rate." In other words, they’re willing to accept a higher rate loan now with the plan to refinance later if (or when) rates ease. This approach isn’t ideal for everyone, but for some it’s a way to move forward with a purchase despite the rate environment. As an agent, staying informed about financing programs, down payment assistance, and other affordability tools is more important than ever. Buyers will look to you for guidance on navigating these challenges.

It’s also important to understand how mortgage rates affect sellers. Many current homeowners are sitting on ultra-low rates they locked in a couple of years ago – often in the 3% range. This phenomenon, often dubbed “golden handcuffs,” means folks are reluctant to sell their home (and give up that cheap mortgage) unless they really have to.

This has kept a lid on new listings to an extent, even though prices are high. Those who do decide to sell need to recognize that the pool of buyers is thinner and more payment-conscious. High rates essentially shrink the buyer pool for any given house, which is why sellers today have to compete harder for attention.

Looking ahead, there is some hope on the horizon regarding rates. Inflation has been cooling off a bit, and if that continues, many economists predict mortgage rates could gradually dip toward the mid-6% range (perhaps around 6.4% or so by the end of the year). That would be a welcome relief, but it’s not a dramatic drop, and it’s not guaranteed. Most forecasts expect rates to stay elevated for the foreseeable future, only coming down slowly.

For planning purposes, it’s safest for buyers and sellers to assume that ~6-7% mortgages will be the reality for a while. If rates do fall unexpectedly fast, that could spur a flurry of activity – but barring that, everyone is adjusting to transact in a high-rate environment. The silver lining is that because rates have been relatively steady in recent months, buyers are starting to acclimate and make moves where they can, and agents can help clients find ways to work within these constraints.

Buyers: Cautious But Open to Opportunity

Buyer activity in the market today is lukewarm compared to the last few years, but it hasn’t disappeared. Many buyers adopted a “wait and see” stance earlier this year when rates jumped. Now, as it becomes clear that 6%+ rates are here to stay for the time being, some of those would-be buyers are tiptoeing back into home searches. They’re motivated by the fact that there are finally more homes to choose from and by the slower pace that gives them room to negotiate.

The latest surveys even show buyer sentiment improving slightly from the pessimism of a year ago – still low, historically, but better. About one in four consumers now believe it’s a good time to buy a home. That may not sound high, but it’s the most optimism we’ve seen in over three years on that question. This suggests some buyers see a window of opportunity in the cooler market: with prices leveling off and inventory up, conditions to buy have improved in some ways (even though high mortgage rates still make it challenging).

One trend among buyers is a willingness to widen their search areas or adjust their expectations to make a purchase feasible. For instance, many house hunters in expensive cities are looking at homes in more affordable regions. In fact, recent data shows over half of online home searches by big-city buyers are for properties outside their current metro area, continuing the pandemic-era pattern of relocating to get more bang for the buck.

First-time buyers, in particular, are being flexible on things like home size or type; some are choosing condos or townhomes instead of single-family houses, or considering fixer-uppers, in order to get into the market. The key for buyers right now is to stay patient but be ready to act when the right deal comes along.

Importantly, today’s buyers have a bit more negotiating power than they’ve had in years. They can often make an offer with contingencies (for financing, inspection, appraisal, etc.) and have a decent chance the seller will accept – something that was tough to do in 2021’s frenzy. Buyers can also ask for reasonable concessions and, depending on the situation, might get things like closing cost credits or repair allowances.

If a home has been sitting on the market for a month or two, that’s a signal the seller might be willing to come down on price or negotiate terms. As an agent, you can really demonstrate your value here by identifying listings that have lingered and using that as leverage for your buyer clients. There’s truth to the saying that in a cooler market “the deal is in the details.” Careful offers, thoughtful contingencies, and creative negotiation can really pay off now.

All that said, buyers remain very price-sensitive and budget-conscious. They haven’t forgotten the lessons of the housing crash and are wary of overextending themselves. With economic uncertainty and high monthly payments, buyers today are generally unwilling to stretch beyond their comfort zone. So while they are more empowered than before, they’re also prudent.

Agents should be prepared to provide a lot of education, from explaining mortgage options to walking through market comps, to help buyers feel confident in their decisions. It may take more showing appointments and more hand-holding to get a buyer to the finish line, but once they find a home that fits both their needs and their budget, they are ready to move.

Sellers: Adjusting to New Realities

For anyone selling a home now, the landscape is noticeably different (and more demanding) than it was a couple of years back. Seller activity is still relatively subdued – new listings have increased from last year’s rock-bottom levels, but we’re not seeing a flood of people rushing to sell. Many homeowners remain hesitant to list unless they really need to move.

The primary hesitation, as mentioned, is giving up an existing low mortgage rate and facing the buyer’s market as a new buyer themselves. Those who do choose to sell in 2025 typically have a compelling reason (job relocation, change in family situation, or perhaps they sat out the wild market of 2021-22 and are now thinking it’s time to cash in equity).

One positive sign is that overall seller confidence has been inching up from the lows of late 2022. Roughly 60% of consumers recently surveyed think it’s a good time to sell a home. That’s better than the sentiment last year (when the market was slowing abruptly), though still more cautious than the height of the seller’s market, when nearly 80% thought selling was a great idea. This improving mindset suggests that as long as a seller has a plan for their next move, they recognize that home values are still near peak levels and buyer demand, while cooler, has not vanished.

However, today’s sellers have to earn the sale. It’s no longer enough to stick a sign in the yard and have buyers flock in droves. The reality is, sellers now face competition and a choosier buyer pool. Price reductions and concessions, things we haven’t talked about much in recent years, are back on the table. We already noted that about 20% of listings have seen price cuts.

Beyond that, an increasing number of sellers are willing to offer incentives like paying for part of the buyer’s closing costs, including home warranties, or providing allowances for repairs and updates. Some sellers are even marketing that they’ll help buy down the buyer’s mortgage rate for a year or two as part of the deal. These tactics can make a real difference in attracting offers, especially for homes that are otherwise similar to many others on the market.

For agents working with sellers, setting the right expectations is key. It’s important to have a frank conversation that in this market, overpricing a home is likely to backfire. Homes must be priced close to fair market value from the start – buyers simply won’t bite at aspirational prices today. Emphasize comparative market analysis and recent nearby sales to drive this point home with your clients. Additionally, investing a bit of effort before listing can pay off. Encourage sellers to declutter, make minor repairs, and stage the home effectively.

A well-prepared listing can still stand out and even sell quickly if done right, but the days of “as-is” properties selling in a flash are mostly behind us. Each listing now requires a tailored marketing plan, quality photos, and broad exposure to reach those choosy buyers.

The upside for sellers is that, despite the challenges, homes are still selling at high prices historically. If priced and marketed correctly, a seller can successfully close a sale without the drama of a bidding war but still at a strong value. Many serious buyers remain in the market, and if a house offers good value (and especially if it’s in a move-in-ready condition or a prime location), it can attract interest relatively soon.

Agents might remind sellers that even though it might take a few extra weeks, the end result can still be a great price, it just requires a bit more strategy. In summary, sellers need to be more flexible and patient in 2025, but with the guidance of a knowledgeable agent and the right approach, they can achieve their goals.

Outlook: What to Expect in the Coming Weeks

As we head through late summer and into early fall, we can expect these current trends to continue in the near term. The market has essentially reached a plateau in many respects – sales volume is bumping along at a lower (but stable) level, price growth is flat-to-slightly up, and inventory is gradually building but not exploding. The summer season in real estate, which is usually the peak for activity, has been more muted this year. August might bring a typical seasonal dip as families focus on the new school year and vacations wind down. Unless there’s a major change like a sharp drop in mortgage rates or a big economic shift, the housing market’s trajectory is likely to stay slow and steady.

Real estate agents should be prepared for a market where every deal requires effort. There’s less “easy business” happening when overall transactions are down. Industry forecasts suggest 2025 might see one of the lowest number of home sales in decades, simply because of the affordability pinch. That means agents may have to work harder to cultivate clients and get them from consideration to closing.

The flip side is that those clients who are active now are often serious and motivated. The tire-kickers have mostly stepped away. Buyers searching in a 6-7% interest world are typically those who genuinely need or strongly want to buy, and sellers listing now generally have a real intent to sell. This can make for more focused engagements, even if fewer in quantity.

In terms of challenges, high mortgage rates and economic uncertainty will remain at the forefront. Buyers will keep grappling with stretched budgets, and many will remain price shy. Inventory, while better, could tighten up a bit if sellers pull back in the fall, which would present its own challenges for buyers who waited.

There’s also the broader economy to watch: factors like inflation trends, job market changes, or any policy shifts (for example, decisions by the Federal Reserve) could impact consumer confidence. Agents should stay informed about these developments as they can quickly influence local market sentiment.

Now for the opportunities. A balanced market is actually a great environment for skilled real estate professionals to shine. Agents can differentiate themselves through hyper-local market knowledge, pricing expertise, and creative problem-solving. For example, knowing about a new home community offering special financing could help a buyer who is stretched thin.

Or being aware of an upcoming wave of corporate relocations in your area might help you target potential sellers who haven’t considered listing yet. Additionally, the current market allows agents to truly advocate for their clients, like negotiating contingencies, inspections, and repairs in ways that simply weren’t possible when every sale was “as-is” in the frenzy period. Satisfied clients in a market like this can become great referral sources, since they’ll appreciate the value you added in a tougher environment.

Agents might also use this time to encourage decisive clients to act sooner rather than later. If mortgage rates do tick down in the future, there’s a likelihood that buyer competition will heat up again (and inventory could tighten if nothing new is coming on the market). In other words, the window for buyers to snag a home without extreme competition might be now. Likewise, sellers who price right in today’s market can attract the serious buyers out there and close deals before an influx of new listings hits in the next spring cycle.