Home sales throughout 2025 remained slow, hitting their lowest level in 14 years, according to the latest analysis from Realtor.com’s economic research team.
Sales of new and existing homes combined, typically reported separately, totaled 4.74 million in 2025, slightly lower than in 2024 and the lowest level since 2011, according to Realtor.com.
While home sales saw a modest improvement in the Northeast, Midwest, and South from 2024, they slipped by around 3% in the West. The decline in the West pulled national growth into negative territory, the analysis showed.
The steep rise in mortgage rates has resulted in total home sales staying considerably low, with almost no change over three consecutive years. This reflects the housing market’s vulnerability to interest rates.
“The last three years have had total sales levels that are on par with the years following the global financial crisis [of 2007–09], but there has been no exogenous shock anywhere near that level during the post-COVID recovery,” said Realtor.com Senior Economist Joel Berner.
Affordability is the biggest challenge for homebuyers, as prices and interest rates continue to rise, according to Realtor.com.
Although the job market is better than it was in 2011, the number of people planning to buy homes has remained the same, Berner said.
Total home sales from 2023 to 2025 appear similar to the period from 2008 to 2011, according to the analysis.
However, this time there has been no similar price correction, leaving limited options for homebuyers who are waiting for either higher incomes or lower mortgage rates.
The consistently low sales figures suggest pent-up demand, and if mortgage rates decline, there could be many interested buyers, Berner said.
Mortgage rates softened in the first two months of 2026, dipping to a low of 5.98% in late February and crossing below the 6% threshold for the first time in more than three years, according to Realtor.com.
While it looked like a promising start to the new year, tensions involving the U.S. and Israel against Iran have resulted in fresh challenges.
The sensitive geopolitical conditions in the Middle East as a result of the conflict have led to oil prices ballooning, sparking fears of inflation and adding more pressure on mortgage rates.
Mortgage rates already pushed past 6% in the past week and are projected to increase further as oil prices continue to rise, according to Realtor.com.
It remains to be seen whether this is a temporary situation as the housing market recovers this year or whether a prolonged oil price shock keeps home sales historically low for a fourth consecutive year.
Haven’t seen prices fall in Santa Barbara.