Halfway through 2025 — and despite hopes for a rebound — homebuyers and sellers are still trying to navigate the choppy waters of the post-pandemic housing market. Elevated mortgage rates, higher-than-normal home prices, still-tight inventory and economic uncertainty are making it difficult for many Americans to pull the trigger on a home sale or purchase.
Affordability remains a major roadblock for many would-be buyers. According to a report released in June by Harvard’s Joint Center for Housing Studies, home prices have increased by 60% since 2019. Mortgage rates continue to hover in the high-6% range. The combination of high rates and prices has resulted in sluggish home sales and strained budgets: The average salary required to be able to buy a home has spiked by 70% in the past five years.
However, buying and selling real estate involves much more than just looking for a low interest rate and a home at the right price.
It’s also important to recognize when the market conditions become more favorable so you can take advantage. According to Hannah Jones, senior economic research analyst at Realtor.com, understanding current trends can help you make smarter choices in a challenging market.
“Buyers can spot opportunities as inventory shifts and mortgage rates change, while sellers can adjust their strategies to avoid overpricing and extended time on market,” Jones says.
For any buyer or seller considering getting into the market in the last half of the year, these are the key trends to keep an eye on.
Mortgage rates are high but stable
Mortgage rates remain high relative to 2021, at which point they averaged under 3%. The average monthly payment on a $400,000 mortgage at today’s 6.75% rate, for example, is about $2,600. The same loan at 2.96%, the average 30-year loan rate in 2021, was about $1,600. So it’s safe to say financing costs remain an issue for many buyers.
On the bright side, however, rates have stayed within a tight range between 6.7% and 6.9% for much of the past six months. Most industry experts expect this trend to continue through the end of the year, with Realtor.com and Zillow forecasting rates to reach 6.4% and “near the mid-6% range,” by the end of 2025, respectively.
This stability could allow prospective buyers to financially prepare for a home purchase without having to worry about large rate swings. For buyers shopping around for a good rate, running the numbers on a mortgage calculator with half-point shifts up and down will provide a reasonable estimate of how much their mortgage costs will be.
Inventory is rising, and home price growth is cooling
At the height of the pandemic, the U.S. had just one month’s supply of homes, meaning that based on the pacing at that time, it would only take one month for every house on the market to sell. The lack of enough inventory to meet demand caused home prices to skyrocket, leading in part to an affordability crunch as buyers engaged in bidding wars over the few homes for sale.
This year, however, there’s been a noticeable increase in the number of home listings. According to the National Association of Realtors, the housing supply in June increased by nearly 16% year over year, reaching a post-pandemic high of 4.7 months of supply. Despite the surge in listings, inventory remains below pre-pandemic levels
The increase in homes for sale has two main benefits. First, prospective buyers have more options to choose from. And second, they can take more time to search for the right home as opposed to rushing to buy one they may not eventually be happy with because of the scarcity.
Upticks in inventory also have a cooling effect on home prices, which are still increasing but at a much slower pace than in previous years. June home prices were up by just 0.2%, with the median home list price coming in at around $441,000, according to Realtor.com. Compare that to 2022, when home prices shot up by 20% at one point.
Ongoing homeownership costs are rising
In the past, if you took out a fixed-rate mortgage, you could count on your monthly payments being fairly stable, even when the costs for homeowners insurance and property taxes were included. That’s no longer the case.
Property taxes increased by 12% between 2021 and 2023 due to rapidly growing home values, per the Harvard report, pushing monthly payments higher. Property insurance has had an even bigger impact: The increased frequency and severity of natural disasters has caused homeowners’ insurance premiums to soar over the past few years, rising by double digits. In 2021, the average annual premium was $2,656. By 2024, annual premiums averaged $3,303 — a 24% increase in three years.
These costs vary by location and are likely to continue to surge, so it’s essential prospective buyers consider these costs — and potential increases — when setting a homebuying budget to “avoid financial strain and ensure long-term stability,” Jones says.
Home sellers are ready to negotiate
More home sellers are not only listing their properties but also being more flexible to ensure the sale goes through. With supply up and buyer interest down, nearly 21% of all listings had their price reduced in June, the highest percentage during that month since 2016.
Price cuts typically occur when the number of homes for sale exceeds buyer demand. These discounts are used as negotiating tools by sellers to attract more people to their listings, which, according to Jones, signals a shift toward more realistic market expectations. It indicates that sellers are no longer expecting to receive higher than list price offers.
Buyers benefit, too. “These price reductions open up stronger negotiation opportunities and provide valuable insight into broader market dynamics,” Jones says.
All of these changes point to a housing market that, while still far from normal, is working its way back toward a healthier balance between buyers and sellers. For those considering a home purchase or sale this year, staying informed about emerging trends and being prepared to act when the opportunity arises ensures they’ll find the right deal at the right time.
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