In June 2025, the number of home listings listed for sale in the U.S. dropped significantly, reaching its lowest point in nearly two years. Seasonally adjusted new listings declined by 3.2% month-over-month and 3.4% year-over-year, marking the first annual dip since late 2023.
Sellers Hesitate Amid Uncertainty
This drop reflects growing hesitation among homeowners. During the pandemic-fueled housing boom, many locked in ultra-low mortgage rates—some even below 3%. With current mortgage rates hovering around 7%, homeowners are reluctant to sell and risk losing that favorable financing, a trend known as the “lock-in effect.”
Economists note that piled-up inventory, combined with weak buying demand,d has discouraged sellers. Instead of listing, many are choosing to hold onto their homes or convert them into rentals, particularly if selling would mean taking a financial loss.
Rising Inventory, Yet Fewer Listings
While active listings—total homes for sale—are up about 13% compared to last year, they actually declined slightly in June, marking the first drop since July 2023. This indicates that although overall supply is growing, the pace of new additions is slowing—and homeowners are choosing to take listings off the market.
Buyer’s Market: Shift in Power?
June’s data shows a shift toward buyers. The median sale price reached a record $447,000, advancing moderately, but strong price gains have cooled. More tellingly, only around 31% of homes sold above asking price, the lowest share for June in five years. Homes are also spending longer on the market—39 days, the longest since 2020. For buyers, this translates to more negotiation leverage and softer competition.
Home Sales Slow Down
Existing-home sales saw a 2.7% drop in June, reaching their lowest level in nine months. Pending sales also declined, signaling buyer reluctance amid rising costs and economic uncertainty.
New-home sales fared only slightly better, rising just 0.6%, yet still 6.6% below last year’s pace. The inventory for newly built homes hit a high not seen since 2007—9.8 months of supply—forcing some builders to trim prices to move stock.
What’s Driving the Inventory Build-Up?
Several key forces are influencing this landscape:
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High Mortgage Rates: Elevated borrowing costs continue to suppress demand, deterring new buyers.
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Seller Lock-In: Those with low-rate mortgages are staying put rather than relinquishing their rates.
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Economic Complexity: Slower wage growth, inflation, and job uncertainty are prompting both buyers and sellers to proceed with caution.
Regional Nuances
Not all areas are affected equally. Affordable Midwestern and Southern metro regions—such as Indianapolis, Columbus, and Charlotte—continue to see relatively stable listing and sales activity. In contrast, high-cost East and West Coast cities are seeing sharper declines in both new listings and pending sales.
Builders Adapt with Land Banking
Builders are responding by adopting land banking strategies: acquiring shovel-ready lots while delaying actual construction investment. This lets them maintain future capacity without overextending, a tactic that helped avoid a bubble in new-home construction.
What Buyers and Sellers Should Know
For buyers, this environment offers greater flexibility and power—more time to find the right home and room to negotiate. The decrease in bidding wars and increasing seller concessions are clear advantages.
For sellers, the market poses challenges. Pricing appropriately and timing the sale are critical, and many may benefit more from renting out their property than selling at a loss.
Broader Implications
The slowdown isn’t isolated. Housing remains a cornerstone of the U.S. economy—closely tied to consumer spending, employment in related industries, and local tax revenues. Reduced inventory can stall related economic activity and flow through the broader financial system.
Additionally, the continuing disparity between low-rate homeowners and prospective buyers widens the wealth divide fueled by home equity.
Looking Ahead
Policymakers and industry stakeholders are watching for potential interventions: incentives for downsizing, expanded housing supply via zoning reforms, and rate adjustments to ease credit access. However, without significant market stimuli—like meaningful rate cuts—or greater new construction, inventory may remain constrained.
Meanwhile, the Federal Reserve’s decisions on interest rates, inflation trends, and economic health will play a pivotal role in shaping housing dynamics. A single rate adjustment could markedly influence both seller sentiment and buyer access.
Final Word
The fall in new home listings underscores how mortgage costs, economic uncertainty, and financial conservatism are collectively reshaping the housing market. With fewer homeowners willing to sell, buyers gain leverage—but can still face obstacles due to limited choices.
As conditions evolve, the eventual easing of rates—or the entry of more sellers—could rebalance this landscape. Yet for now, the real estate market remains in a delicate standoff.
