In February 2025, the U.S. housing market showed signs of resilience as existing-home sales climbed 4.2% month-over-month, reaching a pace of 4.26 million units. However, despite this positive trajectory, the numbers still fall 1.2% behind the same period in 2024 when sales hit 4.31 million, as reported by the National Association of Realtors (NAR).
The increase in sales comes in a context where home buyers are grappling with relatively high mortgage rates, which averaged 6.96% in January—up from 6.84% in February—compared to the lower rates seen in previous months. Such a borrowing environment is challenging for many prospective buyers, prompting them to tread cautiously in their purchasing decisions.
Mortgage rates had surged towards 7% in late January and early February, a significant contributor to buyers’ hesitance. Despite this cautious approach, the combination of rising inventory levels and adjusting home prices indicates that buyers and sellers are beginning to find common ground, albeit in a still-stressed economic climate.
The continued increase in the median home sales price, which saw a 3.8% rise year-over-year this February, points to a still competitive market. This is a slight deceleration from the 4.7% growth observed in 2024, reflecting the impact of these economic pressures on buyer sentiment. Interestingly, even with the homes listed at increasingly lower prices, the overall price trends remain upward.
Amidst this dynamic, expectations for the market moving forward remain cautiously optimistic. A recently released 2025 Housing Forecast by Realtor.com suggests that existing-home sales this year could exceed the long-term lows experienced in the previous year. The changing mortgage rates, if they stabilize or reduce, might reinvigorate the market during the busy spring and early summer purchasing seasons, which set the tone for the rest of the year.
This potential market rebound is particularly timely, as a Realtor.com report has designated April 13–19, 2025, as the "Best Time To Sell." During this period, home sellers can generally expect increased buyer interest, translating to quicker sales and potentially higher asking prices before the market diversifies with more listings. This trend typically allows for a more favorable selling environment before competition from other sellers heats up later in the season.
However, underlying concerns still loom large over the landscape. As buyers have become acutely aware of mortgage rates’ influence, many are opting to hold off until they perceive favorable conditions, like lower list prices or better affordability through larger down payments. The challenge here lies in the current economic environment: household savings rates are at historic lows, making it increasingly difficult for many to accumulate sufficient down payments against the backdrop of high prices across various consumer goods.
Zillow's forecasts complement these findings, indicating that although NAR’s existing sales figures may initially paint a cautious picture, the number of homes sold is expected to recover. Zillow predicts a modest 1.1% increase in existing home sales by the end of 2025 compared to 2024, marking a slower recovery than what was previously anticipated. This outlook reflects an ongoing need for the market to regain momentum amidst external economic pressures.
Looking at the data, the juxtaposition of growing inventory against the slightly declining year-over-year sales volume suggests that buyers are indeed waiting for more favorable conditions before committing to purchasing a home. Such patience indicates that while sellers may see some initial success in early spring, the overall market sentiment remains cautious.
In conclusion, while February 2025 has presented a hopeful uptick in existing-home sales, the broader picture reveals a nuanced landscape filled with both opportunities and challenges. Sellers may benefit from the seasonal uptick predicted for spring, but they must remain attuned to buyers' caution driven by financial constraints. The coming months will undoubtedly be critical in shaping the outlook for the housing market in 2025.
