The U.S. housing market continues to struggle under the weight of high mortgage rates, softening sales, and growing inventory—marking a critical phase in the ongoing housing crisis.
Today’s mortgage rates: July 28, 2025
According to Zillow Home Loans, current average mortgage rates are:
- 30-Year Fixed: 6.625% (APR: 6.787%)
- 15-Year Fixed: 5.750% (APR: 6.028%)
- 30-Year FHA: 6.375% (APR: 7.059%)
- 30-Year VA: 6.500% (APR: 6.797%)
- 20-Year Fixed: 6.625% (APR: 6.830%)
- 7-Year ARM: 7.375% (variable rate)
Rates last updated: July 25, 2025
Market in a freeze: Sales fall, inventory climbs
The U.S. Census Bureau’s June 2025 New Residential Sales report paints a sobering picture:
- New home sales: 627,000 (seasonally adjusted annual rate) — up only 0.6% from May, but 6.6% below June 2024 levels.
- Inventory: 511,000 new homes for sale — an 8.5% increase year-over-year.
- Months’ supply: Up to 9.8 months from 8.4 a year ago, indicating a sluggish pace in demand.
- Median home price: $401,800 — a 4.9% drop from May and 2.9% lower than June 2024.
Despite modest month-over-month gains, year-over-year declines reflect weakening buyer confidence.
Why mortgage rates remain elevated
Several factors are contributing to persistently high mortgage rates:
- Federal Reserve Policy: While inflation has cooled slightly, uncertainty around future Fed rate decisions keeps long-term borrowing rates high.
- Credit conditions: Stricter underwriting and rising risk premiums are keeping mortgage rates above 6.5% for most borrowers.
- Consumer behavior: Fewer buyers are entering the market, and many are holding off amid economic uncertainty.
Builders offer incentives—but it’s not enough
According to Fortune, major builders like Lennar are offering aggressive incentives:
- Lennar is now spending 13.3% of the final sale price on buyer incentives, including rate buydowns—up sharply from 1.5% in 2022.
- These tactics aim to maintain sales volume but also signal a significant softening in buyer demand, especially in high-growth areas like the Sun Belt.
How to qualify for a better mortgage rate
If you’re looking to buy or refinance, here are a few tips to lower your rate:
- Raise your credit score: A higher score can unlock lower rates.
- Increase your down payment: More money upfront reduces risk for lenders.
- Lower your debt-to-income ratio: Pay off outstanding debt to improve your profile.
Zillow’s BuyAbility tool lets you get a customized rate based on your credit, income, and location.
Should you buy or wait?
With rising inventory and softening prices, buyers may gain more leverage in the months ahead. However, waiting for rates to drop significantly could be unrealistic. Those with solid finances and long-term plans may benefit from buying now—especially if they can secure builder incentives or refinance later.
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