Realtor.com
Prospective homebuyers are experiencing a serious budget crunch. The monthly cost of a home purchase is over $1,200 more than it was before the COVID-19 pandemic, as high home prices and mortgage rates have lingered on. Incomes have grown over this same period, but not at a rate fast enough to make homebuying a reality for many.
Home sellers are frustrated as well. 2025 has been the least seller-friendly summer since Realtor.com® began tracking data in 2016, with prices stagnant and time on the market steadily increasing.
This dynamic is far from uniform nationwide, as many Northeastern and Midwestern markets still have not seen inventory reach back up to pre-pandemic levels and many Southern and Western markets now have significantly more homes for sale than they did in 2019. Despite the inventory growth, pending home sales fell again from June to July.
Builders are facing a double whammy of increased costs of labor and materials and decreased buyer demand. New-home sales fell in July on both a month-over-month and year-over-year basis, and the median sale price of a new home is now almost $20,000 lower than the median sale price of an existing home.
Builders are motivated to move inventory and have cut prices aggressively to entice buyers, but these compressed profit margins are leading them to pull back on construction activity.
Watching the market this week, we see prices holding steady and inventory continuing to grow, but at a more moderate pace. The market remains sluggish, with homes spending a week longer than they did last year.
Mortgage rates remained at a 10-month low this week, dropping 2 basis points to 6.56%, and further relief may be in store as all eyes turn to the Federal Reserve.
President Donald Trump called for the ouster of Fed Gov. Lisa Cook in his latest attempt to assert control and lower short-term rates, but the instability created by the move actually has long-term rates trending up, which may undo progress on lowering mortgage rates. The Fed has been clear that it will not bend to the political winds, and instead will base its decisions on data like the Personal Consumption Expenditure index, which came out on Friday and showed inflation continuing at a pace higher than the Fed’s goal of 2%.
Finally, cash rules in Miami, as more than half of the purchases of homes priced above $1 million in the sunny South Florida metro are made without a mortgage. The luxury and ultraluxury segments of the market are flush with cash-rich buyers, allowing sellers to wait longer for the right offer to come in.