U.S. Home Sales Poised for Worst Year Since 1995 as Market Gridlock Deepens

The U.S. housing market is poised for its most significant year in decades. The report predicts sales of existing homes will end 2025 at about the same point they did in 2024, which was the smallest figure since 1995: approximately 4.05 million units.

Buyer and Seller Caution Keeps Market Icy

Yet even with slightly lower mortgage rates and steady price growth, both buyers and sellers are being cautious. Active listings dropped 1.4 percent in August, the steepest monthly decline since 2023, and suggesting that fewer homeowners are willing to list their homes for sale.

“High price growth and economic uncertainty has driven buyers to the sidelines, which in turn is keeping sellers from listing their homes for sale,” said Chen Zhao, head of economic research at Redfin.

The result is a positive feedback loop:

Buyers are also hesitant to buy, in part because prices — now slightly more than 1.7 percent over last year to a national median of $440,004 — and still elevated mortgage rates have reached this point.

Sellers, in turn, are refusing to list homes out of fear they will be forced to trade up into a bigger mortgage rate or sell for less than they believe their property is worth.

Price Cuts And Delistings Soaring

With quiet demand, selling pressures are rising: Many sellers are now either cutting prices or pulling listings from the market altogether. Realtor. com data, delistings were up 47% from last year through June and are now running 34% higher on the year as of present.

This tug-of-war has given some leverage back to buyers, although not all sellers are reacting as fast. “Across the country, we’re in a slow moving market shift where buyers are gaining leverage and sellers are facing a clear tradeoff — either start to drop your price and have an opportunity at emotional or financial satisfaction, or be pushed into the cold of stale inventory,” Realtor wrote. com Senior Economist Jake Krimmel.

Mortgage Rates: How Low Is Low Enough?

Mortgage rates have offered a glimmer of relief. According to Redfin, the average 30-year fixed rate fell to 6.59% in August, the lowest monthly rate over the last ten months. That rate has since fallen to 6.35% as of late September, according to Mortgage News Daily, off from the peak of around 7% in May.

Yet views differ on what rate level would really open up buyer demand:

But some agents say 6% could be a tipping point.

Others contend that rates much closer to 5% are required to have a material impact on affordability.

Zillow estimates that affordability for a “typical” buyer would need to have rates as low as 4.43% — well below the level most experts consider likely in the short term.

Outlook for 2025 and Beyond

For now, however, the market continues to be hampered by affordability struggles and seller hesitancy. But should mortgage rates fall and buyer confidence stabilizes, the housing market could see a small bounce through late-2025.

In the meantime, the stalemate remains — forcing both buyers and sellers as they navigate one of the least certain real estate landscapes in 30 years.