Blog > 2025 Year in Review with mixed results part 1
2025 Housing Market Gut Check: Sales Fell Short, But Signs Were Positive
The 2025 U.S. housing market unfolded with mixed results, as a significant rebound in home sales failed to materialize as widely expected. Despite some forecasts predicting a 9% jump in existing home sales, the final numbers remained largely flat compared to the previous year, hovering around 4.0 to 4.1 million units. This sluggish activity was primarily driven by stubborn affordability challenges, including elevated mortgage rates that consistently stayed in the high-6% range, preventing many potential buyers from entering the market.
However, there were positive developments:
- Increased Inventory: The "lock-in" effect of low mortgage rates began to ease slightly, leading to a welcome increase in housing inventory. The supply of existing homes improved to around 4.1 months, shifting some areas toward a more balanced market and giving buyers more options.
- New Construction Boom: Builders capitalized on the existing home shortage, offering incentives and rate buydowns that helped new home sales capture a larger share of the market, rising to about 30% of single-family sales.
- Modest Price Gains: Home prices continued to appreciate, but at a more sustainable pace of around 2-4%, preventing the runaway growth of prior years and offering some stability.
Looking ahead, experts anticipate a gradual recovery in 2026. Projections suggest mortgage rates may ease further, which could finally unlock substantial pent-up demand and lead to a more meaningful increase in total home sales.