"US Housing Market in Stagnation: Affordability Woes, Slowing Inventory, and Cautious Outlook"

The US housing market has entered a phase of stagnation over the past 48 hours, with national home prices flat for the second consecutive week. Despite a slight drop, mortgage rates remain elevated at an average of 6.61 percent for a 30 year fixed loan, down from 6.67 percent last week. Though expectations for a Federal Reserve rate cut in September have increased, most experts do not anticipate rates falling below six percent anytime soon. This has led to persistent affordability challenges, with 81 percent of existing homeowners sitting on mortgages below six percent and little incentive to sell at current rates.

Inventory growth has slowed, and total active listings climbed nearly 25 percent from July 2024 to July 2025. Homes are spending more time on the market, prompting sellers to cut prices to attract scarce buyers, particularly in smaller cities and former hotspots like Florida and Texas. Zillow recently downgraded its 2025 home price outlook to minus 1.7 percent, and predicts price declines of more than ten percent in certain small cities over the next year.

First time buyers face mounting barriers, now making up only 24 percent of purchases, a record low according to the National Association of Realtors. Competition with investors is a growing factor, with investors accounting for 13.5 percent of sales in 2024, often buying homes with all cash. This makes it even harder for individuals, especially young families, to purchase entry level homes.

Leading homebuilders and real estate firms are responding by ramping up construction in markets where the demand supply gap remains sharp, and offering incentives like mortgage buydowns. At the same time, oversupply and falling prices in select cities are pushing some to delay new projects and shift resources toward renovation and rental conversions.

The market currently resembles a standoff: sellers are reluctant to list homes at reduced prices, while buyers wait for affordability to improve. Price reductions and delistings have surged. Compared to last year, the pace of price growth has nearly stalled, a sharp reversal from the rapid appreciation seen in the post pandemic boom. As consumer sentiment remains cautious and supply chain delays persist, the housing industry is in a holding pattern, waiting for a decisive move in rates or economic conditions before momentum returns.

For great deals today, check out https://amzn.to/44ci4hQ

Episode Transcript

Speaker 1 (00:00):
The US housing market has entered a phase of stagnation
over the past forty eight hours, with national home prices
flat for the second consecutive week. Despite a slight drop,
Mortgage rates remain elevated at an average of six point
six one per cent for a thirty year fixed loan,
down from six point six seven percent last week. Though
expectations for a federal reserve rate cut in September have increased,

(00:22):
most experts do not anticipate rates falling below six percent
anytime soon. This has led to persistent affordability challenges, with
eighty one percent of existing homeowners sitting on mortgages below
six percent and little incentive to sell at current rates.
Inventory growth has slowed and total active listings climbed nearly

(00:43):
twenty five percent from July twenty twenty four to July
twenty twenty five. Homes are spending more time on the market,
prompting sellers to cut prices to attract scarce buyers, particularly
in smaller cities and former hotspots like Florida and TESSAs
Zillo recently downnggrind aided its twenty twenty five home price
outlook to minus one point seven percent and predicts price

(01:05):
declines of more than ten percent in certain small cities
over the next year. First time buyers face mounting barriers,
now making up only twenty four percent of purchases, a
record low according to the National Association of Realtors. Competition
with investors is a growing factor, with investors accounting for
thirteen point five percent of sales in twenty twenty four,

(01:27):
often buying homes with all cash. This makes it even
harder for individuals, especially young families, to purchase entry level homes.
Leading home builders in real estate firms are responding by
ramping up construction in markets where the demand's supply gap
remains sharp and offering incentives like mortgage buydowns. At the
same time, oversupply and falling prices in select cities are

(01:50):
pushing some to delay new projects and shift resources toward
renovation and rental conversions. The market currently resembles a standoff.
Sellers are reluctant to list homes at reduced prices while
buyers wait for affordability to improve. Price reductions and delistings
have surged compared to last year. The pace of price

(02:10):
growth has nearly stalled, a sharp reversal from the rapid
appreciation seen in the post pandemic boom. As consumer sentiment
remains cautious and supply chain delays persists, the housing industry
is in a holding pattern, waiting for a decisive move
in rates or economic conditions before momentum returns.