In June 2025, home prices decided to throw a party, hitting a record-breaking median of $435,300, according to the National Association of Realtors. Meanwhile, home sales took a nap, dropping 2.7% from May to a nine-month low. It’s as if the housing market is playing a prank: prices skyrocket while buyers hide under the couch.
Why are prices climbing when nobody’s buying? Jessica Lautz, deputy chief economist at the National Association of Realtors, sums it up: it’s a market of haves and have-nots. The rich keep trading homes, while first-time buyers stare longingly from the sidelines.
The high-end market is having a blast. Homes over $1 million saw a 14% sales spike compared to last year. Redfin’s data from 2024 noted 8.5% of U.S. homes are now million-dollar babies.
Cash is king in this wacky market. All-cash buyers made up 29% of June’s deals. No mortgage? No problem—just bring a suitcase of cash.
First-time buyers, however, are stuck in a financial horror show. The median home price is 48% higher than five years ago. Saving for years or begging family for help is the only way some manage to join the party.
Mortgage rates are the grumpy bouncer at this housing bash, averaging 6.74%. Each percentage point adds hundreds to monthly payments. Many buyers can’t afford the entry fee.
Lautz points out the “lock-in effect” keeping sellers at home. Those with low-rate mortgages from years past aren’t budging. Why trade a 3% mortgage for a 6.74% one?
Here’s the kicker: if mortgage rates drop, more buyers will flood the market. Lautz warns this could push prices even higher. First-time buyers might need a miracle to compete.
Inventory is up from last year but still below pre-pandemic levels. Redfin reports a record $700 billion worth of homes for sale. That’s a lot of houses collecting dust.
In some places, the market’s cooling off. Redfin’s data shows prices dropped in 30 of 50 major metros, with Washington, D.C., Austin, and San Diego leading the decline. Who knew even houses could get tired of being overpriced?
In D.C., federal job cuts are partly to blame, says Marshall Park, Redfin’s senior market manager. High interest rates are also making buyers rethink their budgets. It’s not just layoffs—it’s math.
Redfin’s approach to tracking prices is a bit quirky. They compare recent sale prices to past ones, unlike NAR’s method. This shows the market’s split personality: hot in some spots, chilly in others.
Nationwide, home prices grew 1% year-over-year in June, hitting $447,054, per Redfin. Sales rose 3.8%, with 487,806 homes sold. Yet, 31% of homes sold above list price, down from last year.
Buyers are getting pickier, and deals are falling apart. Redfin notes 15% of June deals collapsed, the highest for the month on record. It’s a buyer’s market, but nobody told the prices.
Sellers are starting to get the hint. Asking prices are losing steam, and some are open to haggling. Redfin’s data shows median asking prices at $422,238, way above sale prices.
In Florida, the market’s doing its own dance. Home prices dropped 2.2% to $410,400, with sales down 3.2%. Listings are up 8.7%, but homes linger for 70 days on average.
Builders are feeling the pinch too. The National Association of Home Builders reports 38% of builders cut prices in July, the highest since 2022. New home sales are down 7% from last year.
New homes are now cheaper than existing ones, with a median price of $401,800. Builders are churning out smaller starter homes to lure buyers. Location, though, still gives old homes an edge.
Economic uncertainty is the uninvited guest at this housing party. Redfin’s economists predict a 1% price drop by year-end. But with mortgage rates stuck near 7%, don’t hold your breath.
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