Several real estate industry professionals in the United States have stated that the current housing market is “neither good to buy nor good to sell,” primarily due to high house prices and high mortgage rates. Even with the Federal Reserve cutting interest rates, it remains challenging for buyers to find their ideal homes in the short term due to the lack of sufficient housing inventory.
Spring 2025 saw the lowest levels of home sales since 2012, with both buyers and sellers reducing their participation in the market.
According to a Bloomberg report on Thursday, July 31, buyers are backing out due to affordability issues, while sellers are choosing not to sell because they are unwilling to lower prices or give up low-rate pandemic loans (such as 2.3%), leading to a “mortgage lock effect.”
Currently, the median price of homes in the United States exceeds $400,000, nearly a 50% increase from 2015, while mortgage rates remain around 6.8%, making home purchasing costs high and unaffordable for many buyers.
Daryl Fairweather, Chief Economist at the U.S. real estate technology firm Redfin, told Bloomberg that sellers are refraining from lowering prices because they believe it is not worth it, as they may not even be able to afford similar homes currently on the market if they need to reenter the market.
Buyers are hesitant about making large home purchase decisions due to the impact of Trump administration policies such as federal layoffs, trade wars, and job cuts in the tech sector, leading to lack of confidence in the market.
Christina Kipping, a real estate agent in Tampa, Florida, noted that the current market is drastically different from five years ago, with buyers unlikely to decide on a home and make an offer within a week.
Buyers feel restricted due to limited options and high prices. Kipping explained that buyers now prefer to view properties first, then come back two weeks later if they like it, conducting a comprehensive investigation into the community, schools, and walkability.
Similarly, the real estate market was hot five years ago, with many sellers seemingly receiving multiple offers as soon as they listed their properties. As the market has cooled down, sellers are now being asked to reduce prices or make concessions, leading to frustration and caution among sellers, as failing to sell at the desired price could cause friction between both parties.
Another factor that needs to be addressed is the lack of housing inventory.
During a Federal Reserve meeting on Wednesday, when Chairman Jerome Powell was asked about what the rate decision meant for the real estate market, he pointed out another issue beyond rates: “We’re not building enough housing. This is not a problem that the Federal Reserve can solve, but even when conditions return to normal, the situation remains the same…”
According to data from the real estate information website Zillow, despite a decrease in mortgage rates, the U.S. market still lacks approximately 4.7 million housing units.
Fairweather mentioned that due to the limited number of existing homes for sale, many people have turned to buying new homes, with new homes playing a much larger role in the market than in the past decade.
However, for first-time homebuyers, purchasing a newly built single-family home directly often poses a hurdle. Most first-time homebuyers still prefer entry-level homes such as townhouses and condos.
Collyn Wainwright, a real estate agent in Nashville, Tennessee, commented that he has observed a somewhat frozen and leveling market, with many buyers feeling sidelined but still testing the waters.
“Life events such as death, divorce, childbirth, marriage, debt — all drive the real estate industry, prompting people to change their housing needs. While some who could afford to wait when interest rates just started rising may still be able to hang on for a while, often times those with urgent needs cannot afford to wait any longer,” he said.