Home sales plummet as mortgage rates soar and prices rise
- Existing home sales in the U.S. dropped 0.5% in April 2025 from March 2025.
- The average mortgage rate has been above 7% in recent months, affecting affordability.
- This sales decline highlights continued struggles in the housing market amid rising prices and reduced inventory.
In April 2025, sales of previously occupied homes in the United States experienced a notable decline, marking the slowest pace for this period since 2009. The National Association of Realtors reported that home sales fell 0.5% from March 2025, reaching a seasonally adjusted annual rate of 4 million units. Comparatively, the sales figures represented a 2% drop year-over-year from April 2024. This downturn reflects ongoing struggles faced by prospective homebuyers amidst rising home prices and elevated mortgage rates, hindering many from entering the housing market. The total sales of previously occupied homes have been significantly lower over the past three years, at approximately 75% of pre-pandemic levels. Additionally, last year's sales plummeted to their lowest rate in nearly three decades. Current mortgage rates hover close to their peak, exceeding 7% recently, which is creating affordability challenges for many buyers. This situation is further complicated by the limited supply of homes available for sale. As per data from the National Association of Realtors, there were around 1.45 million unsold homes by the end of April 2025, a 9% increase from March, and 20.8% higher than the previous year. This represents the highest inventory level since September 2020, although it still falls short of the typical 2 million homes that were generally on the market pre-pandemic. The current unsold inventory aligns with a 4.4-month supply at the present sales pace, showing a distinct rise from last year’s 3.5-month supply. In April 2025, homes spent an average of 29 days on the market before selling, an increase from 26 days in April 2024. Cash transactions represented a significant portion of sales, accounting for 25%, down from 28% a year earlier. Investors contributed to this percentage, making up 15% of homes sold in April, down from 16% in 2024. This trend indicates that high mortgage rates are particularly affecting those unable to pay in cash, locking out many potential first-time buyers from the market as it remains frozen for those in need of financing to acquire a home.