The 2025 homebuying season is off to a rocky start. Despite a surge in housing inventory and modest price growth, buyers are pulling back amid economic uncertainty and persistently high mortgage rates—causing a ripple effect across the housing and retail sectors.
Home sales slump as inventory rises
April marked the lowest level of existing home sales in six months, according to Redfin data. The seasonally adjusted annual rate dropped to 4.2 million homes, down both month-over-month and year-over-year. Pending home sales fell even more sharply—3.5% from March and 2.7% from April 2024.
At the same time, inventory is on the rise. Total homes for sale in April—both new and existing—hit 1.94 million, the highest level since March 2020, and up nearly 17% year over year.
Despite this long-awaited increase in supply, buyers aren’t biting.
Affordability keeps buyers on the sidelines
While new listings give shoppers more options, affordability remains a major barrier:
- Median home price in April: $438,466 (up 1.4% year over year)
- 30-year mortgage rate: 6.73% average in April (up from March)
- Home price vs. 2020: Still up nearly 70% since April 2020
Dan Close, a Redfin Premier agent, said anxiety about the broader economy—especially in light of President Trump’s tariff policies—is freezing some buyers in place.
“People are waking up and wondering what kind of news will hit next,” Close said. “That uncertainty is freaking prospective buyers out.”
Consumer spending trends reveal deeper housing chill
Retail data supports the slowdown. Home Depot reported Q1 sales of nearly $40 billion, but same-store sales in the U.S. rose just 0.2%, trailing inflation and signaling declines in real purchasing power.
CEO Ted Decker cited “continued customer engagement across smaller projects,” suggesting a shift away from big renovation jobs as buyers hesitate to commit to large investments.
Analysts link the trend directly to housing activity. With $400,000 homes at 7% mortgage rates, fewer people are buying homes—dampening demand for major home improvement projects and purchases like new appliances or furniture.
Economic worries reshape seller behavior
Even sellers are adjusting to the new climate. Meme Loggins, a Redfin agent in Portland, said homeowners are downsizing, offloading investment properties, and turning to condos as a hedge against job loss or economic instability.
“During the pandemic, people wanted more space. Now they want to save money,” Loggins said.
What’s next for the U.S. housing market?
Experts warn that unless mortgage rates drop or economic confidence rebounds, the market will remain sluggish—even during what’s traditionally the busiest season for real estate.
Realtor.com senior economist Joel Berner said March’s drop in pending home sales could be a “sign of things to come through the peak of the 2025 homebuying season.”
Lawrence Yun, chief economist at the National Association of Realtors, echoed those concerns, noting that low residential mobility may limit broader economic mobility as well.
Key takeaways
- Inventory is up, but sales and buyer demand are down.
- High mortgage rates and economic anxiety are slowing the housing market.
- Retailers like Home Depot are feeling the impact as spending shifts to small DIY projects.
- Affordability remains the biggest hurdle, with prices still far above pre-pandemic levels.
Until interest rates fall or inflation eases, housing experts say the 2025 market may stay in limbo.
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