Could this be the tipping point for US housing?
The US housing market is showing little sign of momentum as elevated mortgage rates, high home prices, and slowing household formation weigh on activity. Data from the National Association of Realtors (NAR) shows existing-home sales dropped 2.7% in June to an annual rate of 3.93 million, unchanged from a year earlier. The median resale price reached a record $435,300, marking the 24th consecutive month of year-over-year growth.
New home sales slipped 6.6% from last year, according to the US Census Bureau and the Department of Housing and Urban Development (HUD). While prices for new homes fell nearly 5% in June, builders continue to struggle with high labor and materials costs, alongside waning buyer demand. Single-family housing starts dropped 10% from last year, while completions are down 15.5% compared to a year ago.
Affordability near record lows
The affordability crisis remains acute, a Investing.com report noted. According to Yardeni Research, roughly 24% of homeowner households spend more than 30% of their income on housing and utilities, with half of renter households classified as cost-burdened. Mortgage rates, averaging 6.7% in early August according to Freddie Mac, remain far above pandemic-era lows.
Harvard researcher Daniel McCue warned, “We’re now seeing middle-income households priced out of both ownership and rentals in metro areas that were once considered accessible.” Goldman Sachs forecasts residential investment will fall 8% in the second half of 2025, the largest drag on US growth this year.
Inventory rises but market still tight
While overall housing supply has grown—up 33% from last year, according to CJ Patrick Company—the market remains below pre-pandemic inventory levels. Forbes Advisor reported that the “lock-in effect,” in which homeowners cling to ultra-low mortgage rates from prior years, is easing but still limits listings. Regions such as Florida and Texas are seeing supply rise and price growth slow, while parts of the Midwest and Northeast face continued competition.
Policy efforts and market outlook
After more than a decade without major federal housing reform, bipartisan support is emerging for the ROAD to Housing Act, which would incentivize zoning reform and promote modular housing. Bloomberg described it as “a ray of hope” for addressing the supply gap.
Forbes Advisor reports that a meaningful recovery will require both higher inventory and lower mortgage rates, though experts caution against expecting a sharp rate drop. Zillow forecasts home values to decline 2% by year-end, a report from The Daily Upside noted.
As Lisa Sturtevant, chief economist at Bright MLS, observed, “There is little to suggest any sort of major rebound in home sales as we head into fall.”
What changes do you think could help make the US housing market more affordable? Share your insights in the comments below.
