The protracted downturn in the American housing market has now entered its fourth consecutive year, with sales of existing homes stuck at their lowest level in three decades throughout 2025. Prospective buyers continue to be locked out by the dual pressures of stubbornly high mortgage rates and rising property prices.
A Market in Deep Freeze
According to data released on Wednesday 14 January 2026 by the National Association of Realtors (NAR), sales of previously occupied homes in the United States totalled just 4.06 million for the entirety of last year. This figure is essentially flat compared to 2024, when transactions sank to a level not seen since 1995.
This stagnation means the market has now been operating at an annual pace of around 4 million sales since 2023. This is a significant shortfall from the historical norm of approximately 5.2 million sales per year, highlighting the profound and ongoing nature of the slump.
The Affordability Squeeze
The roots of the crisis trace back to 2022, when mortgage rates began their sharp ascent from the record lows seen during the pandemic. For much of 2025, the average rate on a 30-year mortgage hovered around 7%, according to figures from Freddie Mac. It was not until late summer that these rates began to ease, eventually falling to close to 6% by year's end.
This late-year moderation did provide a flicker of hope, driving a 5.1% monthly increase in existing home sales for December – the fastest sales pace recorded in nearly three years. However, this minor rebound has done little to thaw the broader market freeze.
Compounding the issue of high borrowing costs, the median national home price for 2025 actually rose by 1.7% to reach $414,400. This relentless upward creep in prices, even amidst low sales volume, has created a severe affordability crisis.
First-Time Buyers Bear the Brunt
The current climate is particularly punishing for first-time buyers, who lack the equity from a previous home sale to bolster a new purchase. For many aspiring homeowners, the combination of elevated prices and mortgage payments simply places ownership out of reach.
Beyond pure affordability, a cloud of economic uncertainty and concerns about job security are also keeping a large pool of potential buyers on the sidelines. The market's recovery appears contingent not just on lower rates, but on a restoration of broader consumer confidence.
With sales declining on an annual basis every year since 2022, the American dream of homeownership remains in a state of suspended animation for millions, as the market awaits a decisive shift in the economic landscape.
