New projections point to a continued chill in the housing market
US home sales are projected to remain weak throughout 2025, falling below last year’s already sluggish performance, according to Realtor.com’s updated forecast released Wednesday. The company expects approximately 4 million home sales this year, down from 2024’s historically low 4.06 million transactions—the slowest pace since 1995.
The persistent affordability crisis continues to dampen buyer enthusiasm despite increased inventory. Mortgage rates averaging 6.7% for the year have kept many potential buyers on the sidelines.
“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.
Regional differences shape market dynamics
Geographic variations are creating uneven market conditions across the country. The South and West have seen substantial inventory gains, but affordability constraints continue limiting demand in these regions. Meanwhile, the Northeast and Midwest maintain tighter markets with steadier buyer activity.
Home price appreciation is expected to slow to 2.5% nationwide in 2025, down from 2024’s 4.5% growth rate. This deceleration reflects the market’s gradual shift toward better balance between supply and demand.
Sellers adapt to changing conditions
Market participants are responding to the evolving landscape in notable ways. More than one in five listings experienced price reductions in June as inventory climbed nearly 30% and homes spent longer on the market.
However, not all sellers are adjusting their expectations. Delistings—when homeowners remove properties from the market without selling—surged 47% in the 12 months ending in May. This trend could potentially disrupt the buyer-friendly momentum emerging in some markets.
“If the recent rise in delistings continues or picks up pace, it could interrupt the more buyer-friendly momentum we’ve started to see,” Hale noted.
Rental market provides alternative
The rental market continues offering relief from homeownership challenges. Rents have declined 2.1% over the past year, marking 23 consecutive months of decreases. The median asking rent sits 2.7% below its August 2022 peak, translating to nearly $50 in monthly savings for renters.
Mortgage rates are forecast to ease gradually, reaching 6.4% by year’s end, though uncertainty around economic policies maintains upward pressure on borrowing costs.
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