Housing Market Update: Where Things Stand in 2025

The U.S. housing market in 2025 has been a

mixed bag for both buyers and sellers. Home prices continue to inch upward, but affordability challenges and sluggish activity paint a complicated picture.

Home Prices: Up, But Uneven

At the national level, home prices are up 1.5% compared to last year. However, that number doesn’t tell the whole story. Some regions, particularly parts of the South, have seen price declines, while the North and Northeast continue to experience price gains. What this means for you largely depends on where you live. Sales Activity: At Historic Lows

Home sales are slowing dramatically. In August 2025, 460,000 homes were sold—that’s 2.5% fewer than last year and a 31% drop compared to 2020, when 672,000 homes changed hands in the same month. The market is moving at one of the slowest paces we’ve seen in over a decade.

Mortgage Rates: Still Elevated

The average 30-year fixed mortgage rate is holding above 6%, a far cry from the sub-3% rates buyers enjoyed just a few years ago. High home prices combined with elevated rates have pushed affordability to record lows.

Federal Reserve Policy: Slow and Cautious

The Federal Reserve recently cut its benchmark rate slightly, from 4.5% to 4.25%, with projections of gradual cuts through 2028. However, mortgage rates are more closely tied to the 10-year Treasury yield, which has not moved much despite these changes. For buyers hoping for significant mortgage relief soon, patience may be required. Predictions: What’s Next?

Industry experts project modest growth in 2026:

• National Association of Realtors: +4%

• Fannie Mae: +1.1%

• Mortgage Bankers Association: +0.3%

In short, expectations range from flat to moderate price increases. If the Fed takes a more aggressive approach with monetary easing, home prices could climb higher. Buyer or Seller’s Market?

Right now, the market leans toward buyers, with 35% more sellers than buyers. This is putting downward pressure on prices. Still, ongoing inflation and record levels of money supply are applying upward pressure at the same time—creating a tug-of-war that makes predicting outcomes tricky. Bottom Line

The 2025 housing market is defined by sluggish activity, affordability challenges, and regional disparities. While prices aren’t crashing, they aren’t booming either. The real test will come in how the Federal Reserve manages monetary policy and how the broader economy performs heading into 2026.

For now, buyers have more negotiating power, but affordability remains the biggest hurdle. Sellers, on the other hand, face a market that demands patience and realistic pricing strategies.