The U.S. housing market is showing signs of healthy stabilization as it enters the second half of 2025, buoyed by steady mortgage rates, rising inventory levels, and moderate price appreciation. According to a June 22 report from Realtor.com, key indicators point to a balanced environment favoring both buyers and sellers—marking a notable shift from the volatility of the past few years.
National real estate analysts, including Lawrence Yun, Chief Economist at Realtor.com, have revised their forecasts upward in response to improving market conditions. Yun now projects a 6% increase in existing-home sales and a 10% rise in new-home transactions by the end of the year. These projections are underpinned by slowly declining mortgage rates, which are expected to settle around 6.4% by late 2025. Although this figure remains above the historic lows seen in 2020 and 2021, it signals a more manageable borrowing environment for prospective homebuyers.
Mortgage rates have played a central role in shaping market dynamics throughout the year. After peaking above 7% in late 2024, average 30-year fixed mortgage rates have steadily declined, hovering between 6.5% and 6.8% in June. This relative stability has prompted more homeowners to list their properties and encouraged buyers to return to the market, albeit cautiously. The Federal Reserve’s indication of potential rate cuts later in the year has further fueled optimism among industry experts and consumers alike.
Meanwhile, home prices continue to rise—but at a slower pace than in previous years. Data from early June show a 2% to 4% year-over-year increase in home prices. This marks a deceleration from the 4.5% growth recorded in 2024, suggesting a cooling trend that may improve affordability over time. The National Association of Realtors (NAR) supports this outlook, expecting modest price growth to persist as inventories rise and mortgage costs stabilize.
A crucial factor supporting this price moderation is the recent surge in housing supply. Realtor.com data reveals that existing-home listings rose by approximately 11.7% in June, while new single-family housing starts increased by 13.8%. This expansion in inventory addresses one of the most persistent challenges of the post-pandemic housing market—tight supply. The additional housing options are providing buyers with greater flexibility and reducing competition, which has historically driven rapid price increases.
Industry experts view this uptick in inventory as a turning point. Many believe that the combination of stabilized mortgage rates and a broader range of listings is reshaping the housing landscape into one that is more sustainable. “We’re seeing signs of a healthier market,” said one Realtor.com analyst. “Buyers are gaining leverage, and sellers are adjusting expectations—it’s not the frenetic pace we saw during the pandemic, but it’s a more functional and balanced environment.”
However, challenges remain. Despite improving conditions, affordability is still a significant concern, particularly for first-time buyers. High home prices and even moderate mortgage rates can make monthly payments difficult to manage, especially in competitive urban markets. Additionally, while inventory is growing, it is still below long-term averages, particularly in regions with strong population growth and job opportunities.
Builders have responded by ramping up construction, but supply chain disruptions and labor shortages continue to limit how quickly new homes can be delivered. According to the National Association of Home Builders, sentiment among builders remains cautious due to these headwinds. Still, the increase in single-family home starts suggests that developers are betting on long-term demand.
Looking ahead, market analysts are watching several key indicators closely: the trajectory of mortgage rates, Federal Reserve policy decisions, inflation trends, and employment data. Each of these factors could influence buyer behavior and overall market momentum in the coming months.
For now, the June 2025 housing report paints a cautiously optimistic picture. The residential market appears to be transitioning from the extremes of recent years—defined by record-low interest rates followed by rapid hikes—into a more predictable and manageable phase. This equilibrium could set the stage for continued growth, provided that economic conditions remain stable.
In summary, the latest data from Realtor.com and NAR suggest that the U.S. housing market is entering a period of modest growth and increased stability. With mortgage rates easing, inventory expanding, and home prices rising at a tempered pace, 2025 could offer a more balanced playing field for buyers and sellers alike.