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After four years of a housing market favoring sellers, the tables have now turned. There are currently 1.9 million homes for sale in the U.S. , according to Redfin, but only 1.5 million active buyers. That’s a difference of 500,000 more sellers than buyers, the largest gap on record for the housing market. Redfin advises sellers to adjust their expectations and list their homes at today’s prices rather than trying to sell for the higher price they may have paid when buying their homes in 2021 or 2022.

Long-term mortgage interest rates fell to their lowest level since October, according to Freddie Mac. The average rate on a  30-year fixed-rate home loan declined to 6.58% during the week ended August 14, 2025, down from 6.63% the week before. The average rate a year ago was only slightly lower at 6.49%. The lower rates prompted a burst of mortgage application activity. Loan application volume rose 10.9% in the latest week, with a 23% jump in refinance requests, and a 1% increase in home purchase applications, according to the Mortgage Bankers Association.

It was slightly easier to get a mortgage in July, according to the Mortgage Bankers Association’s Mortgage Credit Availability Index (MCAI.) The MCAI inched up 0.2% last month to 103.9. The index was benchmarked to 100 in March 2012. Any increase indicates a loosening of credit, while a decrease points to tighter lending standards. The increase in the July index was led by a rise in conventional loan credit, specifically among jumbo loan credit availability. The MBA says the month’s increase in credit was due to increased availability of ARM loans.

Long-term mortgage interest rates fell to their lowest level since April in the latest week, attracting more borrowers to the loan table. According to Freddie Mac, the average rate on a  30-year fixed-rate mortgage fell to 6.63% during the week ended August 7, 2025, down from 6.72% last week. Compared to a year ago, the rate was lower still at 6.47%. Meanwhile, mortgage applications rose 3.1% last week, with refinance requests jumping 5% and home purchase loan applications increasing 2%.

In a bright spot for the U.S. housing market, sales of starter-homes increased 3.9% in June from the year before, to the highest June level in two years, according to Redfin.  Inventory of starter-homes also climbed to the highest point since October 2019. However, the average sales price continued to rise, growing 3.1% on an annual basis to $260,000. By city, San Diego led the nation in starter-home sales with an 18% increase, followed by Providence, RI (17.4%), and Sacramento (14.3%).

Rates on long-term mortgages remained in a very narrow range for all of July, and are likely to stay put in the wake of the latest Federal Reserve decision to hold its rate steady for the next six weeks. According to Freddie Mac, the average rate on a 30-year fixed-rate mortgage inched down to 6.72% during the week ended July 31, 2025, from 6.74% the previous week. Since the beginning of July rates have only fluctuated 0.3%.

As the U.S. housing market has softened, home builders like PulteGroup are offering incentives that are twice their normal rate to entice buyers into signing. Pulte, which spends between $18,000 and $21,000 on incentives on a $600,000 home in a “normal” housing market environment, is now paying roughly $52,200 per home sale. The majority of the inducements have been in the form of closing costs reductions, including mortgage interest rate buydowns.

Sales of existing U.S. homes fell 2.7% in June from May on a seasonally adjusted, annualized basis, according to the National Association of Realtors, but they were flat compared to a year ago. Meanwhile, home prices hit a record high for the month of June, increasing 2% from last year to $435, 300. Homes also spent longer time on the market with an average of 27 days, up from 22 in June 2024.

In June 14.9% of all pending home sales fell through, an increase from 13.9% the year before and the highest percentage on record for any June since records started in 2017. Increased inventory and shaky financing are likely the biggest reasons for buyers backing out. The highest contract cancellation rates were in Jacksonville, Fl with more than one in five (21.4%), Las Vegas with 19.7%, and Atlanta with 19.6%.

Home affordability declined 3.76% in May, according to the National Association of Realtors, as the NAR’s Housing Affordability Index dropped to a reading of 97.2 from 101.0 in April and 103.4 in March. However, the index was up 5.31% from a year earlier. The median price for an existing single-family home rose to $427,800 in May and long-term interest rates averaged up around 6.90% while the median family income fell almost $600 from April. By region, the Northeast saw the biggest monthly decline in affordability with a 6.41% decrease, but the West remains the least affordable area with an index reading of just 69.3.

The U.S. housing market is showing signs of cooling down as almost one-third of the largest 100 markets are seeing annual price declines of at least a full percentage point. Total annual home price growth in June was just 1.3%, down from a rate of 1.6% in May and also the slowest pace in two years, according to mortgage technology firm ICE. The largest declines were in Florida, Texas, and California.

The number of U.S. mortgage applications jumped 9.4% in the latest week, according to the Mortgage Bankers Association, as lower interest rates finally enticed more borrowers to the table. The average rate on a 30-year fixed-rate mortgage fell to 6.77% from 6.79% the week before, the lowest level in three months. In response, refinance requests increased 9% for the week and 56% for the year. Home buyers also took advantage of the lower rates, with applications for home purchase loans also increasing 9% for the week and growing 25% from the previous year.               

Sellers who were dissatisfied with a lack of offers or low offers pulled their listings from the market in record numbers in May, according to Realtor.com. Delistings, as this phenomenon is called, rose 47% nationally in May from the year before, a sign that many sellers would rather wait for a more favorable market than negotiate in the current climate. There were 13 homes delisted in May for every 100 homes coming on to the market. The South and West saw the biggest rise in delistings, where overall inventory levels have returned to pre-pandemic levels.

The number of refinance applications surged this week, thanks to a mortgage rate drop of 9 basis points, according to the Mortgage Bankers Association. Refinance requests jumped 7% during the week ended July 2, 2025 from the previous week and were up 40% compared to a year ago. During the same time, mortgage interest rates fell to their lowest level since April, with the average on a 30-year fixed-rate home loan dropping to 6.79% from 6.88% the week before. The decline in rates did not entice more home buyers, however, with applications for home purchase mortgages increasing just 0.1%.

In a warning of potential future financial market stress, mortgage loan delinquencies rose in May, according to data from VantageScore. The year-over-year increase in loans that were past due by 30-59 days rose to 1.03% in May, up from 0.92% in April. The rise came mostly from early and mid-stage delinquencies, even among the traditionally less-risky category of borrowers with credit scores above 660. Foreclosures also jumped, climbing 16.73% since May 2024.