In 2025, US home sales plummeted to their lowest point in three decades, marking the fourth consecutive year of a housing market downturn.
Despite being close to record highs, home prices, coupled with persistently high mortgage rates, discouraged potential buyers from entering the market. According to the National Association of Realtors, the United States saw only 4.06 million home sales last year, a slight decrease from 2024, which had already recorded the lowest sales since 1995.
Since 2023, annual home sales have consistently hovered around the 4 million mark, significantly below the historical average of 5.2 million per year.
“2025 proved challenging for homebuyers, characterized by soaring home prices and historically low sales,” commented Lawrence Yun, the chief economist for the National Association of Realtors.
However, Yun noted that there was a glimmer of hope by the fourth quarter, as mortgage rates began to decline and home price growth slowed.
‘However, in the fourth quarter, conditions began improving, with lower mortgage rates and slower home price growth.’
December was a particular bright spot. Falling mortgage rates pushed existing US home sales up to a 4.35 million annual pace — a 5.1 percent surge from November and the strongest showing in nearly three years.
Meanwhile, the median national home price for 2025 rose 1.7 percent to $414,400, NAR said.
The US housing market slump dragged into its fourth year in 2025 as sales remained stuck at a 30-year low
Rising home prices and elevated mortgage rates kept many prospective home shoppers out of the market
NAR chief economist Lawrence Yun
The housing market’s prolonged slump dates back to 2022, when mortgage rates began climbing sharply from pandemic-era lows.
Since then, a toxic mix of higher borrowing costs, years of runaway price growth and a chronic shortage of homes — driven by more than a decade of below-average home construction — has pushed millions of would-be buyers to the sidelines.
In recent weeks, the Trump administration has floated proposals aimed at easing the affordability crisis, including a 50-year mortgage, a ban on large investors buying houses and a bid to lower mortgage rates by spending $200 billion to buy mortgage bonds.
Some economists say the proposals would have only a limited impact.
But mortgage rates plunged to their lowest level in three years on Friday — the after President Donald Trump said he had ordered Freddie Mae and Fannie Mac to buy bonds.
The average rate on a 30-year loan hovered around 7 percent a year ago and stayed elevated until late summer, before beginning to ease.
Rates ended the year at 6.15 percent — the lowest level since October 2024 — according to Freddie Mac.
Despite the rise in sales in December, 2025 marked the third straight year of dismal sales, the worst slump for the housing market in more than four decades.
Economists believe Trump administration proposals meant to help the housing market will have a minimal impact
There were 1.18 million unsold homes at the end of December, a 3.5 percent increase from a year earlier, NAR said
Home prices also ticked higher in December.
The median sales price rose to $405,400, a 0.4 percent increase from December 2024.
That’s an all-time high for December and the 30th consecutive month with an annual increase in the median sales price, NAR said.
Affordability remains a challenge for many aspiring homeowners, especially first-time buyers who don’t have equity from an existing home to put toward a new home purchase. Uncertainty over the economy and job market are also keeping many would-be buyers on the sidelines.
The sales slowdown means more homes are staying on the market longer.
There were 1.18 million unsold homes at the end of December, a 3.5 percent increase from a year earlier, NAR said. That’s still well short of the roughly 2 million homes for sale that was typical before the COVID-19 pandemic.
Yun is forecasting that existing US home sales will jump 14 percent this year, which is more optimistic than several other housing economist forecasts, which range from a 1.7 percent to 9 percent increase.
Economists generally expect mortgage rates to ease further this year, though most recent forecasts show the average rate on a 30-year mortgage remaining above 6 percent, about twice what it was six years ago.
Rates would have to drop considerably for homeowners, who bought or refinanced when mortgage rates hit rock bottom earlier this decade, to take on a new loan at a far higher rate. So far, those homeowners have been more unwilling to sell.
Still, with mortgage rates at their lowest level in 15 months and home price growth slowing, that could help drive more home sales heading into the spring homebuying season.
‘There´s quite sizeable pent-up demand, and the only way to get that pent-up demand back to the market is we need more inventory and we need better affordability,’ Yun said.
