The U.S. housing market is entering a more balanced phase in July 2025, with fresh inventory, steady mortgage rates, and shifting dynamics between buyers and sellers shaping a more stable yet nuanced housing landscape.
As of June 2025, active listings across the U.S. surpassed 1 million homes for the first time since late 2019—a watershed moment indicating a return toward more normal market conditions. Realtor.com data reported inventory hit approximately 1.08 million by mid-June, and Homes for Heroes echoed this milestone, highlighting that many sellers are adjusting expectations amid expanding supply.
With inventory rising, pricing trends are trending downward. Roughly one-third of sellers have reduced their asking prices, and nearly 40% of homes now sell below their list price. Homes for Heroes data indicated 20.9% of listings had price drops as of May, up from 16% the year prior. These adjustments are ushering in negotiating power for buyers, accommodating more realistic pricing across markets.
Mortgage rates have remained firmly in the 6.5–7% range. Freddie Mac reported a 30-year fixed rate pegged at 6.75%, marking the second straight weekly increase. Zillow also noted rates hovering in the same range and forecast a modest year-end decline to the mid‑6% range. Despite being significantly higher than pandemic-era lows, these rates now offer predictability, though affordability remains a challenge.
Buyers are benefiting from the surge in supply, gaining more options, longer listing times (about 53 days versus the mid-20s in 2022), and greater leverage in negotiations. Sellers are feeling pressure to adjust strategies: staging homes, pricing competitively, and carefully following agent recommendations are increasingly essential. Overpricing is leading to expired listings. Builders and investors are also recalibrating. While some are adopting land‑banking strategies to prepare for future demand, others are offering incentives like rate buydowns, elevated concessions, and even covering closing costs to attract buyers amid weakening demand.
The recovery in inventory is uneven across regions. While the South and West have exceeded pre-pandemic inventory norms, regions like the Midwest and Northeast still lag behind. For instance, metros like Denver, Austin, and Seattle now boast double or near-double inventory recovery, contrasted with slower rebounds in Chicago and Hartford.
Macro-level factors continue to influence market dynamics. Moody’s economist Mark Zandi warns that persistently high mortgage rates near 7% could weigh on the broader economy unless rates decrease. Similarly, Harvard’s Joint Center for Housing Studies points to a 30-year low in home sales, rising monthly housing payments of $2,570, and mortgage rates trapping homeowners in place—all contributing to a suppressed market.
Indicators suggest a plateau in inventory growth and a shift toward balance. Realtor.com found new listings had increased year-over-year but growth was flattening—a signal that summer inventory gains might be settling. Analysts agree: without substantial rate drops below 6%—a threshold NAR says could open the door for approximately 5.5 million households—buyer activity will likely remain tepid.
Looking ahead, the market’s trajectory will depend on several key factors. Mortgage rates are likely to remain elevated unless the broader economic environment shifts significantly. Policy changes, such as the FHFA’s adoption of broader credit scoring models like VantageScore, could ease borrowing restrictions. Builder activity, incentives, and how regional variations continue to play out will also be crucial to watch.
Mid‑2025 is a turning point for the U.S. housing market. With inventory back to pre-pandemic levels, pricing pressure mounting, and mortgage rates stable but elevated, the environment favors well-informed buyers and sellers who adapt quickly. The market isn’t booming—but it’s also not locked down. Stabilization and opportunity coexist, marking a more mature, realistic phase for housing activity.
