US Housing Market: Record Prices Amid Slumping Sales in June 2025

Price growth vs. sales decline: A growing disconnect

Despite the persistent affordability crisis, home prices have now increased for 24 consecutive months on an annual basis, underscoring the market’s supply-demand imbalance. However, the pace of appreciation has slowed sharply compared to 2024, when year-over-year gains exceeded 5% in some months.

• Regional disparities: The Northeast and Midwest saw stronger price growth (up 4.2% and 3.4%, respectively), while the South and West lagged (0.3% and 1%)
• Declining markets: Florida, Texas, Hawaii, and Washington, D.C., reported negative price growth, with Cape Coral, FL, leading declines at -9% annually
• Inventory shifts: Housing supply rose 15.9% year-over-year to 1.53 million units, but remains below pre-pandemic levels (1.8–1.9 million)

Meanwhile, sales activity varied by region:

• Northeast (-8%), Midwest (-4%), South (-2.2%): Declines were sharpest in high-cost areas
• West (+1.4%): A modest uptick, though sales were still down 4.1% year-over-year

What’s driving the trends?

The housing market’s sluggish sales and persistent price growth stem from several key factors. Mortgage rates, averaging 6.75% for a 30-year fixed loan in June, continue to deter buyers, though the National Association of Realtors (NAR) estimates that a drop to 6% could spur an additional 160,000 sales. Economic uncertainty has also played a role, with the Federal Reserve pausing rate cuts in 2025 and softening job markets, making buyers more cautious. First-time buyers, in particular, are being squeezed out of the market, accounting for just 30% of sales in June, well below the 40% needed for a balanced market. Meanwhile, cash buyers are increasingly dominant, making up 29% of transactions (up from 28% in 2024), further sidelining mortgage-dependent buyers and exacerbating affordability challenges.

Consumer impact: A “wait-and-see” market

Prospective homeowners face a tough dilemma. In high-demand areas like Cape Coral, FL, mortgage payments are now 95% higher than in 2020, pricing out many would-be buyers. Homes are also sitting longer on the market, 27 days in June compared to 22 days a year ago, as hesitation grows. While 20.7% of listings saw price cuts in June, the highest rate for the month since 2016, sellers aren’t rushing to slash prices. Instead, many are pulling listings altogether, with off-market withdrawals up 47% year-over-year in May, signaling a standoff between buyers waiting for affordability to improve and sellers unwilling to concede on price.

Economic ripple effects

The housing slowdown threatens to weigh on broader economic growth, with residential investment—including construction and broker activity—remaining a persistent drag on GDP in 2025. Still, there are some encouraging signs. As of May, price growth, now at 1.8% annually, has fallen below inflation, which could gradually improve real affordability. Inventory is also recovering, with Zillow forecasting that supply could near pre-pandemic levels by year-end, easing some of the market’s tightness. Additionally, the Federal Reserve is expected to cut rates in late 2025 or 2026, which could reignite buyer demand and stabilize the market. For now, however, the housing sector remains in a holding pattern, with both buyers and sellers waiting for clearer signals before making major moves.

July outlook: More of the same?

Preliminary data suggests no major turnaround yet:

• Mortgage rates: Still hovering near 7% as of mid-July
• Pending sales: NAR’s June index, based on contracts signed, will be released July 30, offering clues for July closings
• New home sales: A Reuters survey predicts a modest June increase, but existing homes dominate 90% of the market

Bottom line

The US housing market remains stuck in low gear, with record prices and sluggish sales reflecting deeper affordability strains. For now, buyers and sellers are in a standoff, waiting for rates to fall or prices to adjust further. As NAR’s Lawrence Yun put it: “The second half of the year really depends on what happens with mortgage rates.”