In the first half of 2025, the U.S. housing market did not experience the expected rebound. Instead, it has fallen into a stalemate of “high prices, low activity.” The latest data shows that annualized existing home sales in June dropped to approximately 3.93 million units, down 2.7% from the previous month, hitting a nine-month low. More importantly, pending home sales—a forward-looking indicator—also declined by 2.8% year-over-year. Except for relative stability in the Northeast, the Midwest, South, and West regions are all under mounting pressure.

Spring is traditionally the peak season for real estate, but this year it was unusually quiet. A Redfin report noted that spring contract signings fell to their lowest level since 2012, as buyers stayed on the sidelines and overall market momentum waned. Meanwhile, the number of homes for sale continues to pile up. By the end of June, the total value of unsold homes had reached $700 billion, with inventory levels sufficient for 4.7 months of sales—an unusually high figure. Many listings have been on the market for over 60 days without attracting buyers.

In terms of pricing, the market is stuck in a “high plateau.” The S&P CoreLogic Case-Shiller 20-City Home Price Index rose 2.8% year-over-year in May, but posted its first month-over-month decline in nearly two years. Nationwide, the ICE Home Price Index increased just 1.3% in June from a year earlier—the slowest pace in two years. Market segmentation is growing more pronounced: single-family homes rose 1.6% annually, while condo prices dropped 1.4%.

The biggest drag on transactions remains elevated mortgage rates. By summer 2025, the 30-year fixed mortgage rate has been hovering between 6.7% and 7.0%, significantly higher than pandemic-era levels. This has created a stalemate: homeowners with low fixed-rate mortgages are unwilling to sell, while first-time buyers find it hard to afford the high borrowing costs. Both sides are stuck—naturally dragging down sales activity.

Market expectations for price growth have been adjusted downward. Goldman Sachs initially forecast a 3.2% home price increase for 2025 but has since slashed that to just 0.5%, with only 1.2% growth projected for 2026. Analysts cite increased housing supply, financing pressure, and weakening demand as key headwinds. Some economists have warned that prolonged housing market stagnation could spill over into durable goods consumption, construction investment, and broader non-farm employment. If mortgage rates remain elevated for too long, risks could spread into the wider macroeconomy.

The new home market isn’t faring any better. In June, new single-family home sales reached about 627,000 units (annualized), up slightly from May but down 6.6% year-over-year. The median price of new homes fell to $401,800, a nearly 3% drop from a year ago. Homebuilder sentiment remains low, with builder confidence indices lingering at historically depressed levels—suggesting continued caution toward new residential construction.

Regional divergence is increasingly evident. While home prices in the Northeast and Midwest still manage 2% to 4% annual growth, markets in the South and West—once pandemic hotspots—are now experiencing sharp corrections. In Florida, Cape Coral prices plunged 9.3% year-over-year; Austin, Texas fell 4.3%; Tampa dropped 3.4%; and Dallas slid nearly 2%. These once red-hot markets are now struggling with oversupply and declining valuations.

Interestingly, despite the broader market slump, Chinese buyers remain highly active in the U.S. luxury segment. Between April 2024 and March 2025, Chinese nationals spent $13.7 billion on U.S. residential properties—an 83% increase from the previous year. They purchased over 11,700 homes, with an average price of $1.2 million per unit, making them the largest group of foreign buyers. While this offers partial support to the high-end market, it does little to change the overall direction of the broader market.

Looking back on the first half of 2025, the U.S. housing market faces a fourfold dilemma: declining sales, rising inventory, slowing price growth, and elevated mortgage rates suppressing activity. The market is transitioning from a post-pandemic boom into a phase of structural adjustment. Most first-time or essential homebuyers are taking a wait-and-see approach, while high-net-worth buyers are still keeping some level of activity afloat.

Looking ahead to the second half of 2025 and into early 2026, a significant recovery will likely require a meaningful drop in mortgage rates—potentially to around 6.4%—alongside improving supply dynamics and stronger employment and income growth. Industry experts believe that if rates fall and builder sentiment improves, the market might begin to breathe again by 2026. Until then, the U.S. housing sector will likely remain stuck in a phase of “price rigidity and sluggish transactions.”