As we reach the midpoint of 2025, the U.S. housing market stands at a critical juncture. The frenzy of the pandemic-era real estate boom has long since cooled, but in its place we’re seeing a market searching for balance. Higher mortgage rates, cautious buyers, and rising home inventory are combining to reshape what it means to buy or sell a home in today’s climate.

In this comprehensive market update, we examine four key factors influencing today's housing market and provide actionable strategies for navigating these evolving conditions.

FEWER HOME SALES, BUT MOMENTUM IS GROWING

Existing home sales remain well below pre-pandemic levels, with many potential buyers held back by economic uncertainty and affordability challenges. National Association of Realtors (NAR) Chief Economist Lawrence Yun notes, “Home sales have been at 75% of normal activity for the past three years, even with seven million jobs added to the economy. Pent-up housing demand continues to grow.”[1]

However, increased inventory and selective price reductions are sparking renewed buyer interest. Hannah Jones from Realtor.com predicts, “This summer's housing market is expected to display familiar seasonal patterns, but overall activity may remain subdued as buyers contend with elevated housing costs.”[2]

What does it mean for you? With less competition and more room to negotiate, buyers have advantages not seen in years. For sellers, success requires understanding today's buyer mindset and marketing your home accordingly. We can help you analyze local trends and craft a strategy that gets results.

MORTGAGE RATES REMAIN ELEVATED BUT STABLE

Thirty-year fixed mortgage rates are hovering below 7%, with expectations they'll average 6.4% in the second half of the year.[3] Monthly housing payments have more than doubled since the pandemic due to both higher home prices and elevated borrowing costs.[4]

In response, many sellers and builders are offering concessions—from interest rate buydowns to closing cost assistance—to attract cost-conscious buyers.[5]

What does it mean for you? Mortgage rates aren’t likely to drop significantly anytime soon, so waiting for a better rate might not be the most effective strategy. Instead, buyers should focus on ways to reduce costs upfront or refinance later if rates eventually fall. Sellers can stand out by offering buyer incentives. We can help you evaluate your options.

AN UPTICK IN INVENTORY OFFERS OPPORTUNITY FOR BUYERS

One of 2025’s most significant shifts is the dramatic change in housing supply. For the first time in recent history, there are more active sellers than buyers. This reversal stems from return-to-office trends cooling previously hot markets, ongoing affordability issues, and more homeowners deciding to list after waiting out market uncertainty.[6]

“The balance of power in the U.S. housing market has shifted toward buyers,” says Redfin Senior Economist Asad Khan. Many major metros, especially in the South and West Coast, are now considered buyer’s markets.[6]

What does it mean for you? A skilled agent is an invaluable ally in this climate: For buyers, we can help identify hidden gems and guide strong offers. For sellers, we can develop marketing strategies to move your home efficiently, even in a competitive landscape.

HOME PRICES REMAIN HIGH BUT SHOW SIGNS OF SOFTENING

After years of rapid growth, home values are gently descending. While some Northeast and Midwest areas still see price increases, values are flattening or falling in many regions, particularly the Sun Belt. Newsweek reports that home values declined in over half the U.S. states during the first half of 2025.[2]

Economists forecast the median U.S. home price will remain flat in Q3 and dip about 1% year-over-year by the end of 2025. However, the chronic housing shortage will likely prevent any significant price collapse.[5]

Finance expert Michael Ryan tells Newsweek, “The housing market isn't crashing dramatically, more like it's finally coming back down to earth from a sugar high.”[2]

What does it mean for you? Buyers may find better opportunities in market segments where listings linger. For sellers, strategic pricing from the start is crucial. We can help determine what your home is truly worth in today’s market.

LET’S MAKE YOUR NEXT MOVE A SMART ONE

While national reports provide a big-picture outlook, real estate is fundamentally local. As local market experts, we understand what drives home values in your particular neighborhood.

If you're buying in 2025, you have more options and negotiating room—but must remain vigilant about financing. If you're selling, your strategy should reflect today's conditions, not yesterday's highs. And if you're a homeowner, now is an ideal time to evaluate whether to stay put, refinance, or leverage your equity.

The best decision is an informed one. We have the local insight, negotiation skills, and market knowledge to help you succeed—whether buying your first home, selling your third, or simply weighing your options. Reach out today to discuss how the current market can work for you.

The above references an opinion and is for informational purposes only. It is not intended to be financial, legal, or tax advice. Consult the appropriate professionals for advice regarding your individual needs.

Sources:

1. National Association of Realtors

2. Newsweek

3. National Association of Realtors

4. National Association of REALTORS® Legislative Meetings 2025

5. Redfin

6. ResiClub