Key takeaways 

• There are 500,000 more home sellers than buyers and homes are spending more time on the market.
• More than one quarter of home listings see price cuts, but deals are most common in the South and West compared to other parts of the U.S.
• Elevated mortgage rates continue to sideline sales, but a recent easing to 6.58% is a plus for active buyers.

Mixed signals abound as the housing market looks to close out a tough 2025 on a better note.

The housing market is sending mixed signals as it enters the back stretch of 2025. While affordability remains a hurdle, buyers are finding slightly more leverage thanks to rising inventories, easing prices in select markets, and a dip in mortgage rates.¹

Home prices continued to rise nationwide this summer, but the pace of growth has slowed with some metro areas and regions even seeing price declines.² Mortgage rates have also eased in recent weeks, falling to their lowest levels of the year at 6.58%, according to  Freddie Mac’s latest weekly survey.³

There are also 500,000 more home sellers than buyers, giving purchasers some leverage.⁴ Homes are also spending more time on the market, with a median listing of 58 days in July, 5 days more than June.⁵

To be sure, the housing market remains a challenge as high home prices and elevated rates continue to keep many prospective borrowers on the sidelines.⁶ Here’s a few things to watch in the final months of 2025.

Will home prices ease up for buyers? 

The national median sales price for an existing home reached a record high of $429,400 in the second quarter of 2025, according to the National Association of Realtors (NAR). But price increases also appear to be decelerating, growing just 1.7% year-over-year, compared to 3.4% annual growth in the first quarter.⁷

In the second quarter, NAR found price increases in 75% of 228 major metro areas, less than the 83% level in the first quarter.⁸

That trend toward steadier or even falling prices might continue in the third quarter. Recent July data from Redfin showed prices actually dropped in 14 of the 50 largest U.S. cities. Oakland, California led the way with a 6.8% annual decline, followed by two Florida cities, West Palm Beach and Jacksonville, where home prices fell 4.9% and 3.1%, respectively. Two areas in Texas rounded out the top 5; prices in Austin fell 2.9% while Houston saw a 2.8% yearly decline.⁹

Redfin forecasts a 1% national decline in home prices by the end of 2025.¹⁰ Zillow Group Inc. echoes that outlook, predicting its Home Value Index will fall 0.8% by year’s end, which would be the index’s first annual drop since 2011.¹¹

Read more: Equity rich: How American homes built $30K-a-year in value

Deals are growing, but not everywhere 

Zillow also found that 27% of listings in July included a price cut, the highest share for any month since January 2018.¹²

But deals and prices are very much a regional story. In many parts of the Northeast and Midwest, buyer competition has remained tighter, and sellers have retained more leverage. Home inventories lag the national average in the Northeast while affordability is driving strong buyer interest in many parts of the Midwest.¹³

According to NAR data, three Ohio markets rank among the top ten nationally for year-over-year median price increases: Toledo (10.5%), Akron (8.1%), and Cleveland–Elyria (7.8%).¹⁴

It’s been a different story in areas of the South and West, especially certain areas of Florida and Texas where rising inventories and a surge in new home construction have put downward pressure on prices.¹⁵

Some of the deepest price discounts can be found on new homes as builders continue to cut prices to clear unsold inventory amid softer demand.¹⁶ The U.S. Census Bureau reported a median new home sales price of $401,800 in June, a 2.9% drop from the June 2024 price of $414,000.¹⁷

In July, 62% of homebuilder builders said they offered some sort of sales incentive to buyers. But the trend bears watching amid signs that starts on new construction have been slowing in recent months.¹⁸ 

Read more: All things equal? Why new home prices are nearly the same as existing homes

Mortgage rate relief: What will move the needle? 

Elevated mortgage rates have kept many would-be buyers — and sellers — on the sidelines. A new survey from Empower reveals that 7 in 10 mortgage holders don’t want to lose their current mortgage rate, with nearly half (48%) of those surveyed having loans below 4%.  

Overall sales volume is projected by Realtor.com to decline 1.5% annually from 2024, to just 4 million transactions.¹⁹

Active buyers have seen a slight boost in purchasing power as mortgage rates have edged down to 6.58% from earlier levels closer to 7%.²⁰ Many forecasts see gradual and modest declines for the rest of the year. Fannie Mae, for example, projects that rates on 30-year fixed loans will end 2025 at around 6.4% and end 2026 at 6%.²¹

Some see 6% as a key threshold for attracting more buyers to the market.  A 6% rate on 30-year fixed loans would make the median-priced home affordable to an additional 5.5 million households, including 1.6 million renters, according to one estimate from NAR.²²

A more mixed picture could be the norm for the coming months if more modest rate fluctuations persist, with factors like shifting home inventories and regional differences having a greater influence on the housing market.²³

Read more: Homeowners are doing mortgage math – this is their tipping point