US Home Sale fell sharply in June 2025, marking the slowest pace since September of last year. According to the National Association of Realtors (NAR), sales dropped 2.7% from May to a seasonally adjusted annual rate of 3.93 million units—falling below economists’ forecast of 4.01 million.
Despite the sales decline, home prices surged. The median sale price of an existing home reached a new record of $435,300, up 2% from a year ago. This marks the 24th consecutive month of year-over-year price increases. Inventory improved slightly, with 1.53 million unsold homes on the market—a 16% rise compared to June 2024—but it remains well below pre-pandemic norms. The current 4.7-month supply still falls short of the six months typically needed for a balanced market.
Affordability Crisis Intensifies: High Rates, Low Inventory
The persistent slowdown in home sales highlights a worsening affordability crisis. Mortgage rates remain stubbornly high, hovering near 6.8% to 7%, significantly increasing monthly costs for buyers. NAR Chief Economist Lawrence Yun stated that a drop in mortgage rates to around 6% could potentially add half a million annual home sales, but rate relief seems unlikely in the near term.
A recent report from Harvard’s Joint Center for Housing Studies revealed that since 2019, US Home Sale have jumped nearly 60%, driving the typical home price to $441,738. This has pushed the price-to-income ratio to 5.0, far above the long-term norm of 3.0. As a result, the average monthly mortgage payment has risen to roughly $2,570—making homeownership unaffordable for many of the country’s 46 million renters.
Adding to the pressure, many current homeowners remain “locked in” at low mortgage rates from the pandemic era. According to recent data, nearly 60% of homeowners hold mortgages with rates below 4%, discouraging them from selling and further restricting available inventory. First-time buyers comprised just 30% of all purchases in June, well below the typical 40%, while cash buyers accounted for 29%—a sign of growing inequity in housing access.
Relief Hinges on Rates and Supply Expansion
Looking ahead, analysts expect a sluggish housing market for the remainder of 2025. Ben Ayers, senior economist at Nationwide, noted that the combination of high borrowing costs and a cooling labor market will likely keep demand weak through the fall. Nancy Vanden Houten of Oxford Economics echoed that sentiment, suggesting recovery may only begin in 2026—dependent on eventual rate cuts by the Federal Reserve.
Policymakers and economists are increasingly alarmed by the widening affordability gap. Harvard’s research team warned of long-term economic and social risks if housing access continues to shrink, particularly for younger and lower-income Americans.
In conclusion, June’s housing data reflects a market under pressure—defined by record prices, constrained supply, and demand dampened by borrowing costs. Without a significant drop in mortgage rates or a meaningful boost in new US Home Sale construction, the U.S. housing market may remain locked in this cycle of high prices and low movement well into next year.
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Source: https://www.nytimes.com/2025/07/23/realestate/home-sales-drop-prices-rise.html
