The United States housing market experienced a significant downturn in 2025, with sales of previously-owned homes reaching their lowest point in decades. Economic uncertainty played a major role, dampening buyer and seller confidence throughout the year.
Key Takeaways
- 2025 saw 4.06 million previously-owned home sales, a fresh low since 1995.
- De-listings rose by 50% compared to 2024, indicating price disagreements.
- Mortgage rates surged after a mid-April tariff announcement, impacting sales.
- December 2025 ended with a 5.1% sales increase, the best month in nearly three years.
- The median home price in December was $405,400, up only 0.4% year-over-year.
Housing Market Struggles Through 2025
The year 2025 proved challenging for the American housing market. A total of 4.06 million previously-owned homes were sold, according to the National Association of Realtors. This figure marks the lowest level of sales recorded since 1995, surpassing even the previous year's low.
Initial optimism at the start of the year quickly faded. A mid-April announcement regarding new tariff policies created significant financial market instability. This instability had a direct impact on mortgage rates, which saw a sharp increase.
"There was a bit of hope at the beginning of the year and then it really just tapered off (after) Liberation Day," said Selma Hepp, chief economist for real estate data provider Cotality, referring to President Donald Trump’s mid-April announcement of shock-and-awe tariff policies. "Mortgage rates surged after that announcement, home sales flattened out, and nothing happened since."
Key Statistic
2025 existing-home sales were 4.06 million, the lowest since 1995.
Increased De-listings Signal Market Discord
One notable trend throughout 2025 was the significant rise in de-listings. These occur when a homeowner puts a property on the market but then withdraws it before a sale is finalized. De-listings climbed by 50% compared to 2024 figures.
This increase suggests a disconnect between sellers' expectations and buyers' willingness to pay. Many properties remained on the market for extended periods. In mid-autumn, homes typically spent about 63 days on the market. This marked nearly two consecutive years where properties took longer to sell compared to the previous year.
The Impact of Mortgage Rate Fluctuations
The surge in mortgage rates following the tariff announcement had a profound effect. Higher rates reduced affordability for many potential buyers. This led to fewer completed sales and more properties sitting unsold.
Market Context
Economic uncertainty often causes interest rates to rise, directly impacting the cost of borrowing for mortgages. When rates go up, monthly payments increase, making homeownership less accessible for many individuals and families.
Even as the year progressed, the market remained sluggish. Many sellers found themselves unable to secure the prices they desired, leading them to pull their homes from the market rather than accept lower offers.
A Strong Finish to the Year
Despite the overall challenging year, 2025 concluded with a positive turn. December saw a significant increase in sales, rising by 5.1%. This marked the best monthly performance in almost three years.
The fourth quarter brought some relief to the housing market. Mortgage rates began a slow decline, and the pace of home price increases cooled. These factors encouraged more buyers to enter the market, leading to the strong December figures.
Price Stability Returns
The median price for a previously-owned home sold in December was $405,400. This figure represents a modest increase of only 0.4% compared to the same month one year prior. This near-flat growth suggests a stabilization in prices after earlier volatility.
- December 2025 Sales Increase: 5.1%
- Median Home Price (December 2025): $405,400
- Year-over-Year Price Change: +0.4%
Looking Ahead to the New Year
The positive momentum from late 2025 has sparked hope for the coming year. Many housing market observers are cautiously optimistic, similar to the sentiment at the end of 2024.
Cotality's chief economist, Selma Hepp, forecasts a 5% increase in existing-home sales for the upcoming year. This prediction is based on the expectation of continued declines in mortgage rates and slower growth in home prices.
Mortgage Rate Shift
A recent report by Realtor.com shows more outstanding mortgages now carry rates above 6% than below 3%, indicating a significant shift in borrowing costs over time.
However, the market still faces challenges. A phenomenon known as "rate lock-in" continues to deter some homeowners from listing their properties. These homeowners have historically low mortgage rates and are reluctant to trade them for higher rates on a new home.
Despite this, a "gradual resetting" is beginning to occur. More Americans are making the decision to move, either upgrading to higher rates or entering the market for the first time. The overall outlook remains sensitive to unforeseen economic shifts.
"It's my job to know better," Hepp commented, acknowledging the difficulty of predicting future market conditions. "but I'm just trying to point out how hard it is now to see through all of this noise."
