Written as of July 14: In the last two weeks of June 2025 through the first two weeks of July 2025, the U.S. mortgage market has experienced a mix of promising developments and ongoing challenges. Mortgage loan originators (MLOs) have seen interest rates fluctuate slightly, buyer activity showing cautious improvement, and housing inventory finally starting to loosen up in some areas. Meanwhile, refinance applications are ticking higher, and home builders remain wary amid economic cross-currents.
This update provides a national overview of key mortgage industry trends during this period – including interest rate movements, housing demand, home prices, refinancing, builder confidence, and relevant economic factors – and discusses what they mean for MLOs and their clients.
Mortgage Rates Steady with a Slight Dip
During late June and early July 2025, mortgage interest rates have been relatively steady, even edging down a bit before nudging up again. The average 30-year fixed rate hovered around the mid-6% range. In mid-June, 30-year rates were near 6.8%, and by early July, they had dipped to roughly 6.6%–6.7%, the lowest levels in a few months. This downward drift was welcome news after the higher rates earlier in the year.
It was short-lived, however – a stronger-than-expected jobs report in early July put some upward pressure back on rates, nudging the 30-year average up slightly (around 6.7% by the second week of July). The 15-year fixed mortgage similarly held around the high-5% range (averaging about 5.8%–5.9% in late June).
Year-over-year, rates are actually a bit lower than the same time in 2024 (for instance, the 30-year is roughly 0.1% lower than a year ago), but they’re still much higher than the ultra-low rates borrowers enjoyed a few years back. In short, mortgage rates remain elevated, but have stabilized compared to the volatility of 2022–2023.
For now, industry experts expect rates to remain range-bound. The Federal Reserve left its benchmark rate unchanged in June, and while Fed officials have hinted that rate cuts “sooner rather than later” could happen if inflation cools, any significant relief is likely a ways off. (Most forecasts anticipate perhaps a modest rate reduction by the end of 2025.)
MLOs and borrowers should plan for rates in this higher band for the near future. The recent mild dip in rates has been enough to spur a bit more borrower interest – a silver lining we’ll see reflected in applications data below – but the overall affordability challenges of ~6.5–7% mortgage rates remain a key factor in the market.
Housing Demand Shows Signs of Life
Many prospective buyers remain price- and rate-sensitive, but there’s evidence that demand is slowly creeping back compared to last year. Mortgage applications for home purchases in early July were about 25% higher than the same time in 2024, according to the Mortgage Bankers Association.
In fact, after adjusting for seasonality and holidays, purchase loan application volumes rose to their highest level since early 2023 during the first week of July. This suggests more buyers are stepping off the sidelines, encouraged by slightly lower rates and a bit more housing supply than a year ago.
However, this uptick in interest hasn’t translated into a surge of closed sales yet. Data from late June and early July show the number of pending home sales (signed purchase contracts) is actually slightly below last year’s levels – roughly 2–4% lower year-over-year. In other words, buyer traffic is up, but many house-hunters are still hesitant or facing obstacles in finalizing deals.
High home prices and cautious sentiment are likely playing a role. One real estate agent noted that while some homes are still selling quickly, others are seeing multiple price reductions before finding a buyer. The result is a mixed market where activity varies by property and location.
For MLOs, the key takeaway is that buyer interest is there – but confidence to transact is not fully back. More people are touring homes (home tour activity is up double-digits from the start of the year) and online searches for homes are at the highest level in at least a year, indicating pent-up demand.
But many clients may need extra guidance or creative financing solutions to overcome affordability hurdles and turn that interest into actual purchases. Staying in touch with pre-approved borrowers and offering updated scenarios (e.g. if rates dip further or if a listing’s price is reduced) can help motivate those who are on the fence.
Inventory Improves and Price Growth Slows
After several years of severe housing shortages, inventory is finally improving on a national level. The number of homes for sale in June 2025 was significantly higher than a year prior. In fact, June marked the second consecutive month with over 1 million active listings nationwide – up roughly 20–30% compared to June 2024. This is the highest inventory level we’ve seen since the early pandemic period (though it’s still about 10–13% below 2019 pre-pandemic norms). Every major region of the country saw inventory gains year-over-year, with the biggest jumps in the West and South. Simply put, buyers have more options now than they did a year ago.
It’s important to note, however, that the increase in total inventory is partly because homes are taking longer to sell. New listings hitting the market are only slightly up (or even flat) versus last year – in June, new listings were up around 6% year-over-year, but by early July new listings were essentially even with last year’s pace. The bigger factor is that listings are lingering: the typical home spent a median of about 50–55 days on the market in June, which is five days longer than a year ago. With properties sitting a bit longer, active listing counts accumulate.
Sellers are having to adjust their expectations to this new reality. Price cuts have become much more common. Nationally, about 1 in 5 listings in June saw a price reduction before selling – the highest share of price drops for any June since at least 2016. The days of frenzied bidding wars have eased; only roughly 28% of homes are selling above their list price now (down from about 32% a year ago). With more supply and less competition, the trend on home prices has flattened out.
The national median list price in June was essentially flat (+0.2%) compared to a year prior, and the median sale price (around $400,000 in early July) is only about 1% higher year-over-year. In other words, prices remain near record highs, but they’re not really growing much anymore on a national basis. In some overheated metro areas, we’re even seeing modest price declines versus last year, while other markets (especially where inventory is still tight, like parts of the Northeast) continue to see slight price gains. Overall, it’s a far cry from the double-digit annual price increases we saw during the 2020-2022 housing boom.
For MLOs, more inventory and flatter prices are actually welcome changes. It means your buyers may face less competition and have more room to negotiate or take their time choosing a home – a healthier environment compared to the frenzied market of a couple years ago. You might see fewer clients getting priced out by bidding wars.
The flip side is that some homeowners (especially those who locked in ultra-low mortgage rates in 2020/2021) remain reluctant to list at all, which keeps the inventory boost from being even larger. Prepare your borrowers for a market that is gradually balancing out: encourage them that they have more choices and might even secure a deal (e.g. a price reduction or seller-paid closing costs), but also remind them that prices are still near historic highs.
This more balanced market can lengthen the sales cycle a bit, so keep pre-approvals updated and maintain regular check-ins with clients as they shop. Patience and persistence are easier now that the frantic pace has slowed.
Refinance Activity Creeping Back
Rising interest rates over the past two years crushed refinancing activity, but there are hints of a comeback now that rates have stabilized off their peaks. In late June and early July 2025, refinance applications have increased noticeably from the extreme lows of last year.
The MBA reports that refi application volume is roughly 40–50% higher than the same period one year ago. That sounds like a huge jump, but recall that mid-2024 was a very slow time for refis after rates had spiked – so even with that increase, overall refinance activity is still relatively muted. Most homeowners with mortgages under 5% (a large share of borrowers) won’t refinance at today’s 6%+ rates unless they have a compelling reason.
Still, when 30-year rates dipped below about 6.8% at the end of June, some borrowers took the opportunity. Lenders saw a wave of refi applications, including many from homeowners with larger loan balances who are very rate-sensitive. In one recent week, the average refinance loan size jumped above $313,000 – the highest in several months – implying that some higher-end borrowers moved quickly to lower their rates or tap equity while conditions were slightly better. As of early July, refinances account for around 40% of all mortgage applications, a sign that this segment, while not booming, is active again.
A lot of the refi demand now is likely cash-out refinances or consolidation loans, rather than pure rate-term refinances for interest savings. Given that rates remain historically high, many homeowners refinancing today might be doing so to draw on their home equity (for home improvement, debt consolidation, etc.) or to get out of an adjustable-rate or PMI rather than to simply get a lower rate. The key point is that slightly lower rates have opened a small window for certain borrowers to improve their situations.
For MLOs, this is a cue to reach out to your past clients or leads who might benefit from refinancing. Think about borrowers who purchased or last refinanced when rates were 7%+ in 2024 – some of them could save money now or achieve other financial goals through a refi. Also consider homeowners with a lot of high-interest debt; they may be interested in consolidating via a cash-out refi or home equity loan, even if the new mortgage rate is comparatively high.
We’re not in a classic refi boom, but there are pockets of opportunity. Proactively conducting mortgage check-ups (reviewing current rate, loan balance, home value, etc.) can uncover these cases. Even if the conclusion is “hang tight for now,” clients will appreciate that you’re monitoring the market for them. Demonstrating that you’re looking out for their best interest is a great way to deepen relationships in a period of slower overall loan volume.
Builders Remain Cautious as New Construction Slows
The new-home side of the market has its own story lately, and it’s one of caution. Homebuilder confidence in June fell to one of its lowest levels in over a decade. The National Association of Home Builders (NAHB) reported their Housing Market Index at just 32 in June 2025. (For context, that index considers 50 a neutral level – anything below 50 means more builders view conditions as poor rather than good. A reading of 32 is very low; the index has only been that low a couple of times since 2012, such as briefly in 2020 and late 2022.)
Builders are clearly feeling the pinch of high mortgage rates and economic uncertainty. According to NAHB, many would-be new-home buyers have pulled back due to the squeeze on affordability from elevated rates and other costs.
As a result, builders have been increasingly offering incentives or price cuts to sell the homes they are building. Over one-third of builders nationally reported cutting home prices in June – the highest share seeing price reductions since NAHB began tracking that stat in 2022. The average price cut was around 5%.
Additionally, about 62% of builders said they’re using other sales incentives (like covering closing costs, offering free upgrades, or mortgage rate buydowns) to attract buyers. Builders are essentially doing what they can to improve affordability for the limited pool of active buyers.
This caution is also evident in actual construction numbers. New housing starts have slowed down. In May (the latest data available going into early July), total housing starts dropped nearly 10% from the month prior, bringing the annual pace of new construction to its lowest level in roughly five years. The decline was sharpest in multifamily construction, but single-family starts are also not accelerating in any meaningful way.
In fact, NAHB is forecasting that single-family home starts will decline in 2025 compared to 2024 if current conditions persist. In short, builders are pulling back on new projects until they see better market conditions.
For the housing market overall, fewer new homes being built means the inventory crunch could persist longer-term – one reason existing home inventory is so critical right now. For buyers who are in the market, new construction that is available might actually be a relative bright spot: those homes are often easier to finance (no bidding wars, and builders can buy down the rate), and they add some supply especially in areas where resale inventory is extremely low.
For MLOs, the builders’ pullback has a couple of implications. First, any borrowers shopping for a newly built home might find more negotiating power than before. Encourage your clients to inquire about builder incentives – it’s common now for builders to have preferred lender deals, rate buydown offers, or special promotions to move inventory.
As their loan officer (even if you’re not the builder’s preferred lender), you can help borrowers evaluate those offers and possibly match them. Being proactive with local builders can also lead to referral opportunities; many builders are eager to work with lenders who can pre-approve buyers quickly and reliably, especially in a tougher sales environment.
Second, with fewer new homes coming onto the market, the pressure remains on existing homes. This means your purchase business will still be largely focused on resale transactions, and any easing of inventory constraints will be gradual.
If new construction is part of your market, keep tabs on any changes – for example, if mortgage rates drop later in the year, builders might ramp up again. But for now, plan for a slower new-build pipeline. You might also see increased interest in renovation loans (as buyers consider fixing up older homes when new ones aren’t plentiful) – another niche to be prepared for.
Economic Conditions: Steady for Now
A quick look at the broader economy helps put these housing trends in perspective. Overall, the economy in mid-2025 is on solid footing, though not without some headwinds. The labor market remains resilient. The U.S. added roughly 147,000 jobs in June, slightly more than economists expected, and the unemployment rate ticked down to about 4.1% (from 4.2% in May).
Jobs growth has slowed compared to the rapid pace of 2021, but the fact that hiring is still chugging along is a positive sign for housing – people generally feel more comfortable buying homes when they’re secure in their employment. Low unemployment also means more potential buyers have paychecks, even if they’re being cautious for now.
Inflation, which was the big story in 2022, has come down closer to normal levels. As of late spring, consumer prices were rising around 2.5–3% annually, much lower than the 8–9% rates seen at the peak of inflation. The Federal Reserve’s target is 2%, so we’re not quite there yet, but the trend has been encouraging.
In recent months, there have been some mixed signals – for instance, core inflation (excluding food and energy) is a bit sticky around 3%, and some price pressures (like those related to trade tariffs or energy costs) have ticked up. The Fed is watching those factors closely.
Speaking of the Fed, their policy stance is an important backdrop for interest rates. In June, the Fed opted not to raise interest rates further, keeping the federal funds rate in the mid-4% range (4.25%–4.5%).
Fed Chair Jerome Powell, in testimony to Congress, struck a cautiously optimistic tone. He suggested that if inflation remains contained and economic growth slows, the Fed could begin cutting rates “sooner rather than later.”
However, he also emphasized a wait-and-see approach, given uncertainties around issues like trade policy, fiscal deficits, and credit conditions. Essentially, the Fed is not committing to any rate cuts just yet – they want to be sure inflation is truly licked and that the economy isn’t overheating from something like a too-tight labor market.
Most analysts believe the Fed will hold steady or possibly cut slightly toward late 2025. Some forecasts pencil in a total of about 0.50% in rate cuts by the end of next year. For the moment, though, we should expect the Fed’s policies to keep borrowing costs relatively high.
That means mortgage rates may not fall dramatically in the short term, although the worst of the rate spikes is likely behind us as long as inflation stays under control. Long-term bond yields (which influence mortgage rates) have been relatively stable lately, reflecting that sentiment.
Other economic factors are a mixed bag but generally neutral-to-positive. Consumer sentiment is middling – people are no longer as fearful of inflation, but they remain concerned about high prices for big-ticket items like homes and cars. Wage growth has been decent, which helps buyers a bit.
On the flip side, credit conditions have tightened somewhat in 2025 due to previous Fed rate hikes and some banking sector stress; this hasn’t hugely affected mortgage availability for qualified borrowers, but things like jumbo loans or non-QM products might have slightly higher hurdles or rates.
Government fiscal debates (like over budgets and deficits) are ongoing, but so far there’s no major shock from that front. In sum, the economy isn’t booming, but it’s also not in recession – it’s growing modestly. That environment gives the housing market a chance to gradually find equilibrium, as neither a big economic downturn nor runaway growth is throwing things off dramatically.
Better Balance
Lastly, take heart that the market is in better balance now than it has been in some time. It’s not the red-hot seller’s market of 2021, nor is it the screeching slowdown we saw when rates first jumped. We’re in a middle ground – and that can actually be a healthy environment for skilled mortgage professionals.
Borrowers need guidance more than ever to find the right home and loan in a complex market. By understanding these trends and adjusting your approach, you can better serve your clients and keep your business moving forward.
Whether it’s a first-time buyer finally finding a home they love, or a long-time homeowner refinancing for a better tomorrow, your expertise can make all the difference.
Here’s to making the most of the current landscape in the weeks ahead!
Sources
- Realtor.com Research – June 2025 Monthly Housing Market Trends Report
- Redfin News – “Pending Sales Fall as U.S. Home Prices Hit Another Record High” (July 10, 2025)
- Mortgage Bankers Association – Weekly Mortgage Applications Survey Press Release (July 2, 2025)
- Mortgage Bankers Association – Weekly Mortgage Applications Survey Press Release (July 9, 2025)
- Freddie Mac – Primary Mortgage Market Survey Update (July 10, 2025)
- National Association of Home Builders – “Mortgage Interest Rates Flat in June 2025” (Housing Economics report)
- HBSDealer – “Builder sentiment sinks in June 2025” (June 17, 2025)
- CBS News – “Employers added 147,000 jobs in June as U.S. labor market continues to defy expectations” (July 3, 2025)