U.S. Housing Market’s Continued Struggles
The decline in the U.S. housing market has now stretched into its fourth year as of 2025, with home sales lingering at a 30-year low. Higher home prices, coupled with increased mortgage interest rates, have dissuaded many potential buyers from entering the market.
According to the National Association of Realtors, existing home sales reached 4.06 million units last year, remaining unchanged from 2024. That year marked the lowest sales figure since 1995, with a steady fall in sales observed since 2022.
Nationally, the median home price climbed by 1.7% to $414,400 in 2025, per NAR’s report.
Looking back to 2023, sales are expected to hold steady around 4 million units annually. This figure is significantly below the historical average of 5.2 million units per year.
NAR Chief Economist Lawrence Yun remarked, “For homebuyers, 2025 was another tough year characterized by soaring home prices and historically low sales. Yet, some positive signs emerged in the fourth quarter, as mortgage rates began to drop and the rate of price growth slowed.”
This ongoing slump can be traced back to 2022 when mortgage rates began rising from their all-time lows during the pandemic.
Last year, the average interest for a 30-year mortgage hovered around 7% for much of the year before easing to about 6% by year-end, according to Freddie Mac.
In December, a recent dip in mortgage rates allowed U.S. existing home sales to spike to a seasonally adjusted annual rate of 4.35 million units—a 5.1% increase from November and the quickest sales pace seen in almost three years, according to NAR.
This surpassed economists’ expectations, which had projected a sales pace of around 4.14 million units, based on data from FactSet.
Additionally, home prices also saw an uptick in December, as the median sales price increased by 0.4% from the previous year to $405,400. This marked the highest December record and extended a 30-month streak of rising median sales prices, according to NAR.
Despite the decline in mortgage rates, the affordability issue remains a pressing challenge for many aspiring homeowners, especially for first-time buyers lacking equity from a previous home. Economic uncertainty and concerns regarding the job market are also causing many would-be buyers to hesitate.
