Existing-home sales for 2025 are expected to be similar to 2024 levels, which was the ‘worst year for sales since 1995,’ an economist said.
The housing supply in the United States fell by 1.4 percent in August from the previous month, the biggest seasonally-adjusted dip since June 2023, real estate brokerage Redfin said in a Sept. 22 statement.
In addition, new home listings fell 1.1 percent month-over-month, hitting the lowest level since January last year on a seasonally-adjusted basis, it said.
According to the brokerage, sellers are pulling back on listing their properties because demand has become sluggish.
As more sellers withdraw from the market, home prices are moving up. The median home sales price rose 1.7 percent in August on an annual basis to $440,004, the largest gain since March, it said.
“High housing costs and economic jitters have rattled buyers, and that unease has spilled over to sellers. We currently expect existing-home sales to end the year at around 4.05 million, or roughly flat compared to 2024, which was the worst year for sales since 1995,” said Chen Zhao, Redfin’s head of economics research.
Zhao said the good news for the housing market is that mortgage rates have been declining, giving buyers more purchasing power.
“We have yet to see that translate into a significant bump in sales, but that may change if rates continue declining; if we get a stronger-than-expected fall housing market, existing-home sales could end this year a little higher than last year,” Zhao said.
Beth Behling, a Redfin Premier real estate agent in Chicago, said the “magic” mortgage rate is 6 percent.
“Prospective homebuyers are paying attention to mortgage rates, and if they drop to 6 percent, I think we’ll see a flood of interest,” she said.
Mortgage Rates
The weekly average rate for a 30-year fixed-rate mortgage has been falling since mid-July, declining from 6.75 percent to 6.26 percent for the week ending Sept. 18, according to data from Freddie Mac.
This month, rates fell below the 6.5 percent level for the first time since October last year.
In a Sept. 18 commentary, Lisa Sturtevant, chief economist at real estate data company Bright MLS, said that despite the lower rates, affordability still remains a major issue keeping prospective buyers from making purchase commitments.
Sturtevant predicts mortgage rates falling further, citing a Federal Reserve suggestion that the central bank could drop its benchmark interest rates two more times this year. Lower Fed rates typically lower mortgage rates as well.
