As the U.S. housing market cools, new trends are emerging that point toward an upcoming rebound. Delistings are rising, affordability remains stretched, and mortgage rate projections suggest relief may be on the horizon.
Market Pause or Market Shift?
According to Realtor.com, delistings are up 38% year-to-date and 48% year-over-year. For every 100 new listings in June, 21 homes were pulled from the market. The primary reason: sellers locked into historically low mortgage rates are unwilling to reduce prices in today’s high-rate environment.
This follows a familiar pattern in real estate: markets slow, recalibrate, and then recover. And current data is consistent with past transition periods.
Where We Stand: Key Housing Market Trends in 2025
1. Affordability Remains the Top Challenge
- The National Association of Realtors (NAR) Affordability Index is at its lowest point in over 35 years.
- Monthly mortgage payments are 60% higher than in 2020, despite only modest wage growth.
- Even a modest rate reduction can ease the pressure. At a $400,000 loan, lowering the rate from 7.00% to 6.50% saves over $130 per month.
2. Homes Are Staying on the Market Longer
- As of July 2025, median days on market rose to 58 — the highest since 2017.
- Buyer urgency has declined compared to the fast-paced pandemic years.
3. Inventory is Rebuilding, But Unevenly
- Active listings are up 25% year-over-year, topping 1.1 million homes a post-pandemic high.
- However, national inventory is still 13.4% below July 2019.
- Some areas, like Texas (+32.1%), Arizona (+30.2%), and Washington (+30.9%), have surpassed pre-pandemic levels.
- In contrast, Northeast states like Connecticut (-71.1%) and New Jersey (-60.5%) still face deep supply shortages.
4. Where Housing Inventory is Growing Fastest
- West: Up 32.5% year-over-year
- South: Up 25.4%
- Midwest: Up 18.1%
- Northeast: Lags behind, still down 51.1% from pre-pandemic levels
What History Tells Us: Recovery Follows Recession
1980s – Interest Rate Crisis
- Mortgage rates hit 18.6% in 1981, slashing affordability.
- While sales dropped, home prices remained relatively stable.
- By the mid-1980s, as rates fell into single digits, the market rebounded.
2008 – Great Financial Crisis
- Between 2006–2012, home prices dropped nearly 27% nationwide.
- Market began stabilizing by 2010, and by 2015 most areas had recovered.
2020 – COVID Lockdowns
- April 2020 saw an 18% drop in home sales.
- By year-end, record-low rates and shifting lifestyle needs fueled a historic rebound.
- Home sales hit their highest annual total since 2006.
Each downturn was temporary, and each one gave way to new growth. The same signs are showing now.
What Experts Are Forecasting for 2025–2026
Home Sales Outlook:
- Fannie Mae:
-
NAR:
- MBA:
- Predicts 5.2 million sales in 2026 and a 20% increase in mortgage originations
Mortgage Rate Projections (30-Year Fixed):
- Current rate: Around 6.8%
- Fannie Mae forecast: Drops to 6.0% by late 2026
- MBA forecast: 6.4% by late 2026
- Wells Fargo forecast: 6.6% by late 2026
- Rates are stabilizing and showing less volatility than previous years
Why a Market Rebound Is Expected
1. Historical Patterns
- Every past housing slowdown has eventually transitioned into a growth cycle.
2. Inventory Rebound
- Rising listings improve buyer options and ease price pressure.
3. Rate Relief Ahead
- Gradual interest rate declines are expected through 2026, improving affordability.
4. Pent-Up Demand
- Millennials and Gen Z are forming households but remain priced out. Once rates decline, these buyers are expected to re-enter the market.
- According to NAR, 5.5 million additional households could qualify for ownership if rates drop to 6%. That could drive up to 550,000 new purchases within 12–18 months.
What This Means for Investors and Buyers
The key message is clear: today's slowdown is a transitional phase, not a permanent condition.
For Investors:
- Act Now: Take advantage of less competition and more inventory.
- Prepare for Growth: Position financing now to be ready when rates fall and buyer activity surges.
For Buyers:
- Watch for local inventory growth, especially in regions like the South and West.
- Lock in rates or negotiate favorable terms before demand heats back up.
Closing Note from Craig Zager & The Zager Group
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