But another industry report finds balance is beginning to return to the market
of ConsumerAffairsJuly 24, 2025
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Home sales projected to remain below 2024 levels, marking the lowest activity since 1995
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Mortgage rates expected to stay high, with modest easing anticipated by years end
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Home price growth to slow as inventory improves, creating a more balanced market
This weeks existing home sales report from the National Association of Realtors provides a clear view of the problems facing the U.S. housing market. Sales in June dropped sharply, but the median home price hit another record high. The law of supply and demand isnt supposed to work like that.
The median home price continues to go up because people who are still buying homes in this environment can afford to pay for expensive homes. Many middle-class buyers can no longer afford to purchase even the average home.
A new report from real estate platform Realtor.com suggests affordability will continue to be a drag on the housing market for the rest of 2025.
Despite signs of a more balanced market and an improving supply of homes for sale, the number of buyers entering the market remains tepid. Realtor.com projects existing-home sales to total around 4 million in 2025 slightly below the already historically low figure of 4.06 million in 2024. This would represent the slowest pace of sales since 1995.
Affordability squeeze
“Even with more homes on the market, buyer response has remained muted compared to what we’d expect from similar supply shifts in the past,” said Danielle Hale, chief economist at Realtor.com.
Regions like the South and West are seeing more robust inventory increases, yet affordability remains a significant obstacle, keeping demand soft. In contrast, tighter markets like the Northeast and Midwest are seeing steadier buyer activity but limited inventory growth.
The affordability crunch is driven by a decade-long housing shortage, combined with high home prices and elevated borrowing costs. Although more properties are being listed, many buyers are finding that their purchasing power is limited.
Not yet a buyers market
An emerging trend is the market’s ongoing move toward equilibrium. The national months’ supply of homes for sale has reached 4.6 a post-2016 milestone reflecting a less seller-dominated environment. This change sets the stage for what could be the most buyer-friendly market since 2016.
However, bargaining power still varies significantly by region and price point. Buyers looking for homes near the national median price may find more room to negotiate, but this advantage is not universal.
Mortgage rates, while expected to decline slightly through the remainder of 2025, remain elevated. Realtor.com forecasts an average 30-year mortgage rate of 6.7% for the year, gradually falling to 6.4% by December.
While 6.4% might seem high to some buyers, historically, it is close to the average. It seems high because home prices inflated in the wake of the pandemic when borrowing rates fell to 3%. Without a decline in home prices or an increase in modestly-priced homes affordability will remain an issue.
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