The U.S. housing market continued to struggle in 2025, marking its fourth consecutive year of decline. Sales remained stagnant at a 30-year low, hindered by soaring home prices and elevated mortgage rates that deterred many potential buyers from entering the market.
According to the National Association of Realtors (NAR), sales of existing homes in the U.S. totaled 4.06 million in 2025, a figure that was essentially unchanged from the previous year. This prolonged slump in home sales has been ongoing since 2022, with the market failing to reach the historical norm of 5.2 million annual sales.
The median national home price in 2025 saw a modest increase of 1.7%, reaching $414,400. Despite efforts to stimulate the market, such as proposals for a 50-year mortgage and measures to lower mortgage rates, economists remain skeptical about the potential impact of these initiatives.
One positive development in late 2025 was the slight decrease in mortgage rates, with the average rate on a 30-year mortgage dropping to 6.15%, the lowest level since October 2024. This led to a 5.1% increase in existing home sales in December, reaching a seasonally adjusted annual rate of 4.35 million units.
However, affordability remains a significant challenge for many prospective buyers, particularly first-time homeowners who lack equity for a down payment. Economic uncertainty and job market concerns have also contributed to a slowdown in sales, resulting in a greater number of homes remaining on the market for extended periods.
At the end of December, there were 1.18 million unsold homes, a 3.5% increase from the previous year. This represents a 3.3-month supply at the current sales pace, well below the balanced market range of 5 to 6 months between buyers and sellers.
Looking ahead, NAR Chief Economist Lawrence Yun is cautiously optimistic about a potential 14% increase in existing home sales for the upcoming year. While mortgage rates are expected to continue easing, they are projected to remain above 6%, significantly higher than in previous years.
Despite these challenges, the recent decline in mortgage rates and slowing home price growth may help stimulate more sales as the spring homebuying season approaches. With pent-up demand and a need for increased affordability and inventory, the housing market could see a resurgence in activity in the months to come.
