The US real estate market has shown a slight improvement in sales of existing homes, with a 2% increase in July compared to the previous month. The National Association of Realtors (NAR) reports that around 4 million existing homes will be sold this year, significantly lower than during the pandemic and before it.
However, there are some positive indicators: more homes are for sale, with a record-high inventory since the 2020 lockdown period. This gives buyers more options and leverage to negotiate. Prices have also softened in many markets, with 33 of the 50 largest metro areas experiencing price declines.
The market is slow due to high prices and mortgage rates. Rates currently average around 6.6%, and home prices have risen nearly 50% since before the pandemic. However, a slight decrease in mortgage rates has spurred refinance activity, especially among homeowners with mortgage rates above 7%.
Mortgage Bankers Association deputy chief economist Joel Kan predicts that interest rates will remain close to 6.6% through the end of the year, but may drop further if the Federal Reserve cuts rates. He expects some change next year, when rates could reach the 6.5% range.
The “lock-in effect” is easing as more people move out and give up low mortgage rates, leaving households stuck in homes that are too small or too large. The rising inventory level reported by NAR suggests a shift away from this phenomenon, but turnover remains sluggish.
New home construction data shows mixed indicators: housing starts were up 5% over the previous month, while building permits declined nearly 3%. National Association of Home Builders chairman Buddy Hughes attributes these trends to affordability challenges and high regulatory costs.
Source: https://www.npr.org/2025/08/22/nx-s1-5510058/housing-market-mortgage-rates-homebuilding