Key Takeaways
- Existing home sales in the US have plummeted to historic lows, with June 2025 recording an annualised rate of 3.93 million units—comparable to post-crisis levels of the early 2010s.
- Persistently high mortgage rates, peaking near 8% in 2023, and soaring home prices have significantly eroded affordability across key regions, notably Southern California.
- Inventory levels have increased modestly, yet demand remains tepid, leading to prolonged market listings and rising unsold stock among builders.
- The downturn poses broader economic risks, potentially shaving 0.5–1% off US GDP and dampening consumer sentiment tied to home equity and wealth effects.
- Outlook hinges on Federal Reserve rate policy and macroeconomic conditions; modest sales recovery is forecasted for 2026, though downside risks persist.
The US housing market is grappling with a profound slump, as home sales over the past two years have sunk to their lowest sustained levels since the early 2010s. This downturn, marked by persistently weak transaction volumes, underscores mounting affordability barriers and economic headwinds that could ripple through broader financial markets.
Mapping the Decline in Sales Volumes
Recent data paints a stark picture of stagnation in the residential real estate sector. According to the National Association of Realtors (NAR), existing home sales in June 2025 fell to an annualised rate of 3.93 million units, down from 4.04 million in May and reflecting a broader trend of contraction. This follows a pattern where sales in September 2024 dropped to 3.84 million units, the slowest pace since October 2010, with a 3.5% year-on-year decline. Extending back, 2023 saw total home sales plummet to levels not witnessed in nearly three decades, with annual figures hitting lows reminiscent of the post-financial crisis era.
Comparisons to the early 2010s are particularly telling. Back then, the market was recovering from the subprime mortgage meltdown, with sales hovering around 4 million units annually amid high unemployment and foreclosure waves. Today’s figures, while not driven by the same credit crunch, echo that era’s malaise. For instance, pending home sales—a forward-looking indicator—hit record lows in late 2023, even surpassing the depths of the 2008–2009 crisis in some metrics, as reported by CNBC. The spring buying season of 2025, typically a period of resurgence, instead saw contracts for home sales tumble to a 12-year low between April and June, per real estate firm Redfin, with volumes 29% below 2021 peaks and 3% under pandemic-era troughs.
Regional variations amplify the narrative. The West Coast has borne the brunt, with some areas experiencing drops exceeding 30% year-on-year, while Southern California recorded a 43% decline in sales over a two-year span ending in early 2024—the steepest on record. Inventory, meanwhile, has crept up modestly, with 1.13 million homes available at the end of September 2023, yet this has failed to stimulate demand, leaving listings to linger longer on the market.
Drivers of the Sustained Downturn
At the heart of this sales drought lies a toxic brew of elevated mortgage rates and soaring property prices. The average 30-year fixed mortgage rate briefly topped 8% in October 2023, before easing to around 6.5–7% in mid-2025, but even these levels have priced out a significant portion of potential buyers. Affordability metrics have deteriorated sharply; only 17% of households in Southern California could qualify for a median-priced home in early 2024, down from 27% two years prior. Nationally, median home prices surged by double digits in some periods, with a notable 20% year-on-year increase in certain markets by mid-2025, despite the sales slowdown.
Economic uncertainty has compounded the issue. Weak employment reports, such as those triggering mortgage rate dips in August 2024, have deterred buyers wary of job market stability. Builders, facing piling inventory, reported record-high unsold stock in mid-2025, as per NAR data, signalling a mismatch between supply and demand. This is not merely a cyclical dip; demographic shifts, including an ageing buyer pool with the average age pushing upwards, and lingering pandemic-era hesitations, have reshaped market dynamics. As one wry observer might note, the American dream of homeownership now comes with a side of sticker shock and interest rate indigestion.
Key Metrics Highlighting Affordability Strains
- Sales Volume: June 2025 at 3.93 million annualised, down 2.7% month-on-month (NAR).
- Inventory Levels: Up 20% in some regions by mid-2025, yet demand lags, with 44% of listings seeing price cuts (Redfin).
- Price Growth: Median single-family home prices dropped 11.9% over two months in mid-2022—a record at the time—but have since rebounded unevenly, hitting all-time highs in 2023 despite sales weakness (CNN Business).
- Regional Declines: West region saw slight gains in late 2024, but overall, three of four US regions posted losses (CNBC).
Economic Implications and Broader Market Ripples
This protracted sales slump carries significant ramifications for the wider economy. Housing typically accounts for 15–18% of US GDP through construction, renovations, and related spending. A sustained drop in transactions could shave growth forecasts, with analysts at Bloomberg estimating potential drags of 0.5–1% on annual GDP if the trend persists into 2026. Consumer sentiment, already fragile, may erode further as wealth effects from home equity diminish—particularly for middle-class households locked into low-rate mortgages and reluctant to sell.
From an investment perspective, real estate investment trusts (REITs) and homebuilder stocks have felt the pinch. For context, as of 11 August 2025, the iShares US Home Construction ETF (ITB) has traded sideways amid volatility, reflecting investor caution. Sentiment from Wall Street analysts, as gauged by S&P Global, remains mixed: while some see a soft landing with rate cuts spurring recovery, others warn of “more declines imminent,” echoing NAR’s 2022 alerts during similar slumps.
Forecast models add nuance. Goldman Sachs’ housing outlook, updated in July 2025, projects a modest 5% uptick in sales for 2026, contingent on Federal Reserve rate reductions to 4–4.5% by year-end. However, if inflation reaccelerates or unemployment rises above 5%, sales could flatline at sub-4 million units, per their downside scenario—a level last seen consistently in the early 2010s recovery phase.
Looking Ahead: Pathways to Revival or Further Pain?
Revival hinges on several pivots. A decisive easing in monetary policy could unlock pent-up demand, as evidenced by mortgage rates plunging to one-year lows in August 2024 following weak jobs data. Yet, with home prices still elevated—up 4–5% year-on-year in many metros as of mid-2025—affordability remains the linchpin. Policymakers might intervene via incentives, but historical precedents suggest recoveries from such lows take years, not quarters.
In sum, the housing market’s descent to early-2010s lows over the past two years is not just a statistical footnote; it is a barometer of economic vitality. Investors would do well to monitor inventory builds and rate trajectories closely, as the sector’s fortunes could presage broader shifts. While dark clouds linger, a glimmer of rate relief might yet prevent a full-blown freeze—though, as history shows, housing crashes rarely announce themselves politely.
| Period | Existing Home Sales (Million Units, Annualised) | Year-on-Year Change | Source |
|---|---|---|---|
| June 2025 | 3.93 | -2.7% (MoM) | Trading Economics/NAR |
| September 2024 | 3.84 | -3.5% | CNBC/NAR |
| September 2023 | 3.96 (approx.) | -15% (from prior peaks) | CNN Business |
| Early 2010s Avg. | ~4.0 | N/A | Historical NAR Data |
(Data as of 11 August 2025)
References
- Bloomberg. (2023). US existing home sales sink to lowest level since 2010. Retrieved from https://www.bloomberg.com/news/articles/2023-10-19/us-existing-home-sales-sink-to-lowest-level-since-2010
- CNN Business. (2023–2024). Various articles on US home sale figures and pricing trends. Retrieved from https://www.cnn.com/2023/10/19/homes/existing-home-sales-september/index.html; https://www.cnn.com/2024/01/19/economy/us-home-sales-2023/index.html
- CNBC. (2022–2025). Coverage of home sales, mortgage rates, and affordability. Retrieved from:
- https://www.cnbc.com/existing-home-sales/
- https://www.cnbc.com/2023/10/19/september-home-sales-drop-to-lowest-level-since-the-foreclosure-crisis.html
- https://www.cnbc.com/2023/11/30/pending-home-sales-drop-to-record-low.html
- https://www.cnbc.com/2024/08/02/mortgage-rates-lowest-level-in-a-year.html
- https://www.cnbc.com/2024/10/23/september-home-sales-drop-to-the-lowest-level-since-2010.html
- https://www.cnbc.com/2025/04/24/march-home-sales-drop.html
- National Association of Realtors. (2023–2025). Historical and current home sales data.
- Redfin. (2025). Home listings and regional trends report. Retrieved from https://www.redfin.com/news/home-listings-fall-june-2025/
- Trading Economics. (2025). United States Existing Home Sales. Retrieved from https://tradingeconomics.com/united-states/existing-home-sales
- X.com (formerly Twitter). Various datasets and commentary used as supplemental indicators:
- https://x.com/nickgerli1/status/1552336166485123072
- https://x.com/davenewworld_2/status/1939738006623261154
- https://x.com/nettermike/status/1755610880656753115
- https://x.com/DylanLeClair_/status/1554134398785802240
- https://x.com/KobeissiLetter/status/1835807046718960076
- https://x.com/zerohedge/status/1527290043051614215
