U.S. Existing Home Sales Hit Nine-Month Low in June Amid High Rates and Economic Uncertainty
U.S. existing home sales fell to a nine-month low in June, as elevated mortgage rates and economic uncertainty continued to deter potential buyers, signaling further weakness in the housing market.
According to the National Association of Realtors (NAR), the slowdown in resale activity, combined with a recent dip in single-family home construction, suggests that residential investment—which includes new builds and real estate commissions—likely remained a drag on Q2 GDP growth.
While housing contributes less than 5% to GDP directly, it has a significant ripple effect through sectors like furniture, appliances, and consumer spending. Analysts warn that a prolonged downturn could weigh on the broader economy.
“The housing market ended the first half of 2025 on a soft note,” said Ben Ayers, senior economist at Nationwide, citing high mortgage rates and labor market fragility. He expects weak sales to persist through summer and fall, as many renters wait for better rates and economic stability.
📉 Sales Slip Nationwide, With Pockets of Strength in the West
Home resales declined 2.7% in June to a seasonally adjusted annual rate of 3.93 million units—the lowest level since September 2024. Economists had forecast a drop to 4.00 million units. Sales were flat year-over-year.
Regionally:
- Northeast, Midwest, and South all recorded monthly declines
- The West saw a modest increase in sales
Meanwhile, homebuilding activity hit an 11-month low in June, and permits for future construction fell to the lowest level in over two years, according to recent government data. However, new home sales are expected to show a modest gain, per a Reuters poll.
Mortgage Rates, Fed Policy, and Trump’s Criticism
The 30-year fixed mortgage rate has hovered just under 7% in 2025, after the Federal Reserve paused rate cuts amid inflation concerns tied to President Donald Trump’s protectionist trade policies.
Trump criticized Fed Chair Jerome Powell on Tuesday, blaming him for high borrowing costs.
“People can’t buy homes because this guy keeps rates too high—probably for political reasons,” Trump said.
The Fed is expected to hold rates steady at 4.25%–4.50% at its upcoming meeting. The central bank last cut rates in December 2024, following three cuts that year.
“The Fed won’t rush to save the housing market—it’s just one sector,” said Carl Weinberg of High Frequency Economics.
Trump has also floated eliminating capital gains taxes on home sales to boost the market.
Buyer Demand Weakens as Supply Rises in Key Regions
Soft sales, especially in the Washington, D.C. area, have driven up inventory. That region has been hit hard by Trump administration spending cuts and public sector layoffs, which have dented local housing demand.
Nationally, inventory rose 15.9% year-over-year in June to 1.53 million units. At the current sales pace, that translates to a 4.7-month supply, up from 4.0 months a year ago. A 4–7 month range is considered balanced, but this rise stems from both higher listings and slower sales.
While overall supply remains below pre-pandemic levels of 1.8–1.9 million homes, markets like D.C., Idaho, Nebraska, Texas, and Florida have seen inventory spike. New York, by contrast, still faces tight supply.
“Weaker labor demand may be contributing to both softer buyer interest and a rise in forced sales,” said Charlie Dougherty of Wells Fargo.
Prices Hit Record High Despite Softness in Some Markets
The median existing home price rose 2% year-over-year to a record $435,300 in June.
Redfin data showed national home prices up 3.4%, the smallest annual gain in two years.
- Washington, D.C. led the slowdown with 2.9% growth, down from 10.9% in March
- 30 of 50 metro areas saw prices decline month-over-month
- Annual price drops were recorded in Tampa, Austin, and Dallas
Market Dynamics: Listings, First-Time Buyers, and Cash Sales
- Homes spent 27 days on the market, up from 22 days a year ago
- First-time buyers made up 30% of sales, up slightly but still well below the 40% considered healthy
- All-cash transactions accounted for 29% of deals, up from 28%
Distressed sales, including foreclosures, stayed low at 3%, up from 2%, but far below the 30–40% range seen during the 2007–2009 financial crisis.
Outlook: Sideways Until 2026?
“We expect sales to remain flat through the rest of 2025 and begin recovering in 2026,” said Nancy Vanden Houten of Oxford Economics, adding that a rebound may follow if the Fed resumes rate cuts in earnest.
